News Comments Today’s main news: SoFi to get its name on a football stadium. Petal raises $300M. Funding Circle closing in on 1-year anniversary of float. Zopa sends warning of imitation scams. Cumulative UK alt lending hits 11.3B GBP. Companies to get social credit in China. Today’s main analysis: Student loan refinancing rates are down. […]
China to take social credit to companies. This is a big deal, especially for U.S. companies doing business in China. Also, it has major implications for P2P lenders in China in the wake of China’s crackdown on the sector.
Europe: Binance enters phase 5 of crypto lending. And introduces new coins XRM, ZEC, and DASH. Crypto lending is getting to be a big deal. It’s on the rise, and Binance, the largest crypto exchange in the world, is on the cutting edge. As soon as crypto is legitimized, crypto lending will become one of the largest segments in alternative lending.
Online lender SoFi Lending Corp. has secured the naming rights and a 20-year deal with the Rams and Chargers, according to the Los Angeles Business Journal. The firm agreed to pay around $20 million per year, reports say.
SoFi Stadium, which will be the largest in the NFL, is the centerpiece to the much larger $5-billion Hollywood Park project developed by Rams Owner/Chairman E. Stanley Kroenke. Construction is 75 percent complete, and the stadium is expected to open next summer for other events before the NFL preseason begins in August.
The opening of the $2.6 billion SoFi Stadium will happen next summer on July 25th. However it’s not for a Rams or Chargers game. Swift announced that she will play two shows (July 25th and July 26th) at the stadium as a part in her much-anticipated 2020 world tour.
Key Findings from the OnDeck Small Business Survey:
Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
57% of small businesses surveyed said they were either ”Very Optimistic” or ”Somewhat Optimistic” about the economic outlook for their businesses;
93% of those surveyed said they plan to vote in the 2020 election.
60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.
President Donald Trump was the choice of 37% of small businesses surveyed, followed by Joe Biden at 18%. When combined, the top five Democratic candidates were the preference of 44% of respondents.
GoCardless, the London fintech that aims to become the one-stop shop globally for businesses that want to let customers pay via recurring bank payments, has launched a U.S. debit solution.
Specifically, GoCardless’ new U.S. product supports debit payments on the ACH (Automated Clearing House) network.
The company has also opened an office across the pond in San Francisco’s financial district, headed up by Andrew Gilboy, general manager, North America, who was previously the company’s chief revenue officer.
Today Nav, a fintech company that matches business owners with their best financing options for free, announced new offerings to help small business owners boost their business credit scores, giving an easy solution to developing a strong business credit profile that alternative and traditional lenders can trust and finance.
Since 2013, the disparate impact rule has objectively examined the effects of business practices with lenders, landlords, insurers, and real estate professionals against the provisions of the 1968 Fair Housing Act. The rule required that first a plaintiff must establish a discriminatory effect in policies and/or practices, before the defendant(s) would bear the responsibility of proving their own practices were nondiscriminatory.
During delivery of Capitol Hill testimony earlier this spring, Nikitra Bailey, an EVP with the Center for Responsible Lending (CRL) also underscored the importance of disparate impact in fair housing.
“Disparate impact analysis encourages creative approaches that both increase effectiveness and inclusion,” testified Bailey. “This process and the value of disparate impact analysis was recently pointed out and endorsed by the largest personal loan company in the country, Lending Club.”
Online lender BlueVine announced on Wednesday it has appointed Brad Brodigan as its new Chief Commercial Officer. BlueVine reported that through this role, Brodigan will be responsible for overseeing revenue-generating functions including sales, customer service, and partner management.
Money360, a technology-enabled direct lender specializing in commercial real estate (CRE) loans, announced today it closed approximately $170 million in loans during July and August. This benchmark brings Money360 close to $500 million in loans closed this year.
Groundfloor, a real estate lending and investing platform that allows anyone to participate directly in real estate investments, has launched a new product to make the lending process more easier for real estate investors. Groundfloor now allows certain developers to gain pre-approval on loans with a new program called “QC Maxx.”
In financing news, student loan fintech “College Ave” locked down a $300MM securitization and a AAA rating this week. The securitization was co-led by both Barclays and Goldman Sachs. Affirm, led by Max Levchin, is reportedly close to wrapping up a $1.5 Bn debt and equity financing with Thrive Capital and Spark Capital leading.
Stripe is mirroring other payments companies that have since built lending capabilities – notably, Square and PayPal. Stripe believes it can compete in an already crowded small business lending market (OnDeck, Kabbage, Fundera, Funding Circle, etc.) due to its data & channel advantages stemming from its payments business.
OppLoans, a growing fintech and top rated direct-to-consumer online lending platform, announced today that it has secured its first bank-led asset-backed revolving credit facility. This facility structure will enable OppLoans to further its mission by broadening access to online personal lending products for more middle-income consumers with credit challenges.
M&G Investments and Community Capital Management, a mutual fund that specializes in impact and Community Reinvestment Act (CRA) related investments, have joined with U.S. and international banks to invest $145 million in Aura’s social bonds to finance the origination of affordable, small dollar installment loans to working families in the United States.
Almost all U.S. challenger banks offer no-fee checking, savings accounts and enhanced personal financial management tools. Now some of the most popular have taken, or are poised to take, their next step: making loans.
Personal loans and credit cards are lucrative but inherently risky, and these young companies — like MoneyLion, Varo and others — will have to prove to regulators, investors and the public that they have the wherewithal to weather downturns in the credit cycle.
Prevu, a customer-focused digital home buying platform delivering industry-leading efficiency and savings, announced today the closing of its $2 million seed funding round. The round was led by Corigin Ventures, a prominent seed-stage venture capital firm with expertise in the real estate technology and consumer industries as well as a history of backing startups disrupting residential brokerage business models.
Prodigy Network founder Rodrigo Niño is stepping down from his position as CEO amid mounting financial and legal issues, The Real Deal has learned.
Prodigy, a real estate crowdfunding platform, has faced criticism from investors in recent months over underperforming investment properties and unpaid distributions. On Monday, an investor in one of Prodigy’s newest projects — the 13-story Standard Hotel in Chicago — filed a lawsuit alleging the firm was “insolvent” and had used investments “for purposes other than those relating to the project.”
Opportunity Zones are new, tax-advantaged vehicles for investors to earn more on their money. Created by the Tax Cuts and Jobs Act of 2017, the first qualified opportunity zones (QOZs) first hit the market in early 2018. Designated by state authorities, there are now thousands of QOZs in the US designed to boost development in selected communities. Investors receive a break on capital gains taxes which can be significant. Local officials can spur economic development which leads to more jobs. Online investment platforms immediately saw the opportunity intrinsic to QOZs with multiple platforms now offering investments in developments that benefit from these tax breaks.
Why are your Opportunity Zone Offerings better than some others available on competing investment platforms?
Soren Godbersen: There are a number of firms out there now marketing Opportunity Zone offerings to investors. We’re proud of what we have been able to offer to our investor network and there are a few things about our Opportunity Zone investments that are unique:
AFTER A DECADE OF steady growth, the economic cycle is due for a reversal, with concerns of a recession.
Consider other types of investments outside of stocks and bonds.
Know that timing the market is difficult.
What to Invest in During a Recession?
Other less correlated assets include the real estate niche. With real estate crowdfunding, hypermarket segmentation is available. Investors can choose their property type and geographic region when investing in real estate. Two real estate crowdfunding platforms for accredited investors are CrowdFund and EquityMultiple. Fundrise and Groundfloor open targeted real estate investing to nonaccredited investors as well.
The Litecoin Foundation is putting its capital to work, lending at interest through another cryptocurrency program.
The Foundation has tapped the Celsius Network, a blockchain-based crypto lending program, to become its preferred crypto wallet, Celsius Network CEO Alex Mashinsky told CoinDesk.
As part of the deal, the Foundation will allocate an undisclosed portion of its treasury to the Network. LTC holders can receive up to 10.53% annually back on their crypto holdings and dollar loans as low as 4.95 percent as well.
In a sign of how much Walmart Inc. is betting on e-commerce, the retailer’s revamped credit-card program with Capital One Financial Corp. offers better rewards for online shopping and checking out with its mobile app.
The new options, which become available Sept. 24 and use Mastercard Inc.’s network, offer 5% cash back for purchases made at Walmart’s website, including groceries. At the chain’s physical stores, shoppers only get that rate for a year and have to check out with Walmart Pay at the cashier. Otherwise, store customers get 2% back.
Finicity, a provider of real-time financial data access and insights, announced today the release of its new Verification of Income and Employment (VOIE) solution using patent-pending TXVerify technology that will speed up borrower verifications and further advance the industry shift toward a fully digital experience.
The Finicity VOIE solution digitally extracts a borrower’s pay statement data from the paystub and then cross-verifies that key data with their income transactions from their financial institutions. Enabled by its TXVerify technology, this detailed vetting process creates a real-time picture of an applicant’s income and employment for fast, accurate reports. The solution does this by leveraging the highest value data – direct from banks – along with a scan, photo or PDF of a borrower’s paystubs. This process significantly shifts the current paradigm from a mostly manual process to one that is fully digital, all while reducing fraud and increasing confidence in the underwriting process.
ConsenSys founder Joseph Lubin announced at the Ethereal Tel Aviv press conference (on September 15) that his New York-based venture studio is launching a new product, Codefi, for the emerging decentralized finance (DeFi) ecosystem.
Despite not having invested in emerging DeFi platforms, Lubin described P2P lending systems such as Uniswap and MakerDAO as some of the blockchain industry’s most promising projects.
ZOPA has warned over a growing number of scam operators targeting UK customers using the peer-to-peer lender’s name to dupe investors.
They include: asking customers directly for their Zopa login details; claiming to work with companies investing money in Bitcoin or other cryptocurrencies; or working with companies who would ask them to take out a Zopa loan to fund an investment.
MORE than 150,000 lenders were invested in 321,483 loans facilitated by Peer-to-Peer Finance Association (P2PFA) platforms at the end of the second quarter, which the trade body deemed “a record level of involvement in the sector”.
Funding Circle is the largest P2P lender among the P2PFA platform members, having lent out a cumulative total of £5.4bn as of the end of the second quarter. It is followed by Zopa at £4.5bn, with ThinCats in third place with just over £491m.
£814m of new loans were made in the second quarter, compared to £866m in the first three months of 2019.
European fintech company Transferwise has recorded its third year in a row of profits; the company reported its net profit after tax climbed to £10.3 million in the fiscal year ending March 2019, up 66% from the previous year on revenue of £179 million;
The product range includes five Cash ISA Notice accounts, exclusive to Smarterly, ranging from 35 days at 1.05% to one year at 1.25%; Customers will not be able to apply for these products with OakNorth directly;
First Quarter of Fiscal Year 2020 Operational Highlights
Total loan volume facilitatedwas US$ 28.2 million (RMB192.3 million) during the first quarter of fiscal year 2020, a decrease of 93.5% from the first quarter of fiscal year 2019.
Gross billing amount (net of VAT)was US$4.7 million during the first quarter of fiscal year 2020, a decrease of 90.7% from the first quarter of fiscal year 2019.
Gross billing ratio (net of VAT)for credit loans was 16.7% during the first quarter of fiscal year 2020, an increase from 11.7% during the first quarter of fiscal year 2019.
Number of borrowerswas 18,546 during the first quarter of fiscal year 2020, a decrease of 36.0% from the first quarter of fiscal year 2019.
Number of investors was 9,534 during the first quarter of fiscal year 2020, a decrease of 85.9% from the first quarter of fiscal year 2019.
First Quarter of Fiscal Year 2020 Unaudited Financial Highlights
Net revenue was US$4.9 million during the first quarter of fiscal year 2020, a decrease of 90.5% from the first quarter of fiscal year 2019.
Operating costs and expenses were US$12.6 million during the first quarter of fiscal year 2020, a decrease of 18.9% from the first quarter of fiscal year 2019.
Net loss was US$7.2 million during the first quarter of fiscal year 2020, compared to net income of US$29.7 million in first quarter of fiscal year 2019.
Basic loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15, compared to basic earnings per ordinary shares (“EPS”) of US$0.62 in first quarter of fiscal year 2019.
Diluted loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15, compared to diluted EPS of US$0.56 in first quarter of fiscal year 2019.
Adjusted net loss attributable to Hexindai Inc.’s shareholders (Non-GAAP) in the first quarter of fiscal year 2020 was US$7.0 million, compared to adjusted net income attributable to Hexindai Inc.’s shareholders (Non-GAAP) of US$29.9 million in the first quarter of fiscal year 2019.
Adjusted EBIT (Non-GAAP) in the first quarter of fiscal year 2020 was (US$5.8) million, compared to US$36.6 million in the first quarter of fiscal year 2019.
Hong Kong has built a strong environment for fostering innovation and financial technology or FinTech. With its large financial sector and its strategic role with Mainland China and gateway to the rest of Asia and the world, Hong Kong has the potential to take on an important role in being a leader in FinTech. In March 2019, for example, Hong Kong issued its first virtual banking licences, which will likely increase adoption of FinTech in the financial services sector.
Emerging technologies used in Fintech services and operations come in different forms, and include:
data analytics that support the operations of financial institutions (for example, credit scoring, loan processing);
peer-to-peer (P2P) financing (such as P2P lending and crowdfunding platforms);
distributed ledger technology, such as cryptocurrency, bitcoin transactions and smart contract applications, as well as blockchain services to help reduce fraud by keeping provenance data on the blockchain; and
financial investments, such as stock trading apps, robo-advisors and algorithmic trading and budgeting apps.
Leading cryptocurrency exchange Binance has announced its launch of the fifth phase of its cryptocurrency lending product in which it customers subscribe to an allocation to lend other users their funds for interest rates as high as 15% Apr.
the 15% interest rate was only available to Binance’s native coin lenders in the first phase. On Tuesday, the exchange revealed three coins that will be included in the crypto lending product including only privacy-centric coins Monero [XMR], Zcash [ZEC] and Dash [DASH]. Their annualized interest rates will be a constant 3.5% but the lending period is only two weeks starting from this Friday September 20th through October 4th.
According to a company release, the purchase price was in the “low seven-digit amount.” Payment will take place in two separate tranches. creditshelf has the option of settling both tranches in the course of two capital increases via a contribution in kind.
Today, Singapore sits proudly atop the Euromoney Country Risk (ECR) rankings. Based on ECR’s blend of financial and economic data, combined with the views of leading economists, no country in the world today has a stronger financial position.
When MAS said in July 2019 that it planned to issue five new digital banking licences, analysts soon spotted that three of them were wholesale licences, open to banks and non-banks alike.
Winners will be encouraged to lend, using digital means, to small and medium-sized enterprises and other non-retail segments – further evidence that corporate banking will be the next segment to feel the hot breath of disruption on its neck.
Equifax Inc. (NYSE: EFX) and Urjanet today announced a global partnership that empowers consumers and businesses to share their payment data from thousands of utility, telecom and cable providers worldwide for a more complete picture of individual payment history, easier identity verification and the potential for better access to credit. This partnership builds on Equifax’s leadership in alternative data, using the Urjanet Utility Data Platform to incorporate consumer-permissioned data into the Equifax differentiated data approach.
According to Deloitte, we shouldn’t view DLT as just a new type of “database ” but rather as a new way to organize the security value chain from issuance to custody. But what exactly can be transmitted through this chain?
Fractional ownership – take as much as you want
Digitizing shares makes them highly divisible, meaning that investors can buy very small percentages of tokenized assets.
So long, intermediaries!
Security tokens have a simpler investment structure and lower fees.
On the way to maximum liquidity
Cherry on top
A security token is basically a digital signature connected with a smart contract responsible for facilitation and verification of ownership rights transactions.
Groww, an online investment platform that sells mutual fund products, has raised $21.4 million (Rs 152.5 crore at current exchange rate) in a Series B funding round led by Silicon Valley-based venture capital firm Ribbit Capital.
Groww said existing investors Sequoia India and Y Combinator also participated in the funding round.
The Reserve Bank of India (RBI) is studying how non-bank lenders and home financiers price their loans, close on the heels of directing commercial banks to link their loan rates to external benchmarks.
The Reserve Bank of India has ordered commercial banks and non-banking lenders to stop providing unregulated entities access to consumer data held by credit bureaus, dealing a blow to scores of fintech startups that have based their business models on such information.
The banking regulator is not in favour of hybrid loan products or ‘teaser loans’, a senior Reserve Bank of India (RBI) official today clarified. The remark gains significance in the light of State Bank of India chairman Rajnish Kumar’s recent comment that SBI would seek the regulator’s view on whether banks can introduce fixed-cum-floating rate products.
FlexiLoans.com, an online lender for MSMEs in India, said that it has crossed a milestone number of disbursing over INR 5 billion of unsecured business loans across the country with its unique digital-only model. The Mumbai-based company, which has disbursed over 16000 loans across 1000 cities and towns in the country, says that there is no dearth of demand on the credit side. The company caters primarily to micro, small and medium-sized businesses.
How has the online lending market shaped up in the last few years?
Digital Lending market is currently at about USD 2 billion, up from about USD 1 billion in 2016. Significant traction and market niches discovered by various FinTech startups across the country have made this space very exciting, holistic and game-changing.
The declining demand for peer-to-peer (P2P) lending in China has prompted firms to find business elsewhere. LearnBonds report that Chinese P2P companies are eyeing Vietnam, which alarmed local lending companies.
About 70 per cent of the population in the Middle East and north Africa do not have access to banking services, says Ian Dillon, co-founder of Now Money, a Dubai-based financial technology group.
The GCC recorded outbound remittances of $120bn in 2017, according to World Bank data. However, Gulf banks tend to exclude workers earning less than $1,400 a month, leaving most of them reliant on exchange houses to remit cash home.
News Comments Today’s main news: Klarna launches Boost. Funding Circle going where banks won’t. Zopa CEO says marketing restrictions appropriate for riskier platforms. ApplePie Capital hits $300M franchise loan milestone. Menē, Affirm partner. Today’s main analysis: SoFi and Prosper Q3 earnings. Today’s thought-provoking articles: LendingClub is healthier than ever. Average homeowner age in U.S. metro areas. Robo-advisors growing. Top 5 emerging […]
ApplePie Capital, the first and only online lender dedicated to franchising, announced that it recently surpassed $300 million in loans originated to franchise entrepreneurs opening or expanding their businesses.
The gap between current and projected financial conditions continues to widen suggesting greater volatility ahead:
Prosper’s 10Q revealed that the company lost $19.8 Mn in 3Q, a $7.2 Mn improvement YoY. Net revenues declined from $28.9 Mn to $20.7 Mn YoY. Originations declined from $822 Mn to $640 Mn YoY driven by tighter credit guidelines and rising interest rates.
SoFi’s EBITDA loss in Q3 was $12 Mn compared to an EBITDA gain of $56 Mn in Q3 2017. SoFi’s originations were $2.5 Bn, down by 30% YoY. Rising rates have slowed SoFi’s student loan refinancing business and have contributed to the drop in originations. SoFi now has 700 k checking account customers and the company is branching into offering a suite of wealth management services to these customers. SoFi recently closed a $560 Mn line of credit.
Below is a comparison of key financial metrics of Prosper, SoFi, and their publicly-traded counterpart LendingClub.
Investors are barely noticing it, but LendingClub (LC) continues to pump through another record-setting quarter as the P2P lending platform shores up its core business and boosts its profit targets for the year. Volatility has largely left LendingClub stock; the company has traded in the $3-4 range for the better part of this year as investors have moved on to more exciting names, but in my view, LendingClub is well-positioned for a near-term rebound.
On the back of LendingClub’s strong Q3 report, the company also inched up its guidance for FY18. The forecast now calls for $693 million in revenue and $91.5 million in EBITDA at the midpoint of management’s ranges:
The U.S. District Court for the Northern District of California appointed lead plaintiffs in a class-action suit against LendingClub, alleging the San Francisco-based company tried to artificially inflate securities and defraud investors.
The plaintiffs, under the title LendingClub Investor Group (LIG), include Xiangdong Ding and Zhenbin Chen, who will serve as lead plaintiffs in the suit according to the Nov. 7 ruling. Ding and Chen invested in and allegedly suffered substantial monetary losses as a result of the fraud.
LendingTree set out to find which metro areas have the oldest homeowners. Using data from the U.S. Census Bureau’s American Community Survey, we ranked the 100 largest metropolitan areas by average homeowner age. While some of the rankings aren’t surprising (Florida metros dominate the “old” end of the list), cities popular among millennials aren’t necessarily gaining young homeowners.
The average age of a homeowner across the 100 largest metropolitan areas in the United States is 54. Only two metros in our analysis — Provo and Ogden, Utah — have an average homeowner age below 50.
Homeowners in Florida are older than homeowners in most other states. Seven out of the top 10 metropolitan areas with the highest average homeowner age were in Florida.
Homeowners in cities in Utah are among the youngest in the country. Out of the top 10 metropolitan areas with the lowest average age for homeowners, metropolitan areas in Utah — Provo, Ogden and Salt Lake City — held the top three spots.
LendingHome today released a never-before-seen, inside look at localized market statistics based on a combination of LendingHome proprietary data and publicly available real estate records.
LendingHome’s inaugural “State of The Flipping Market” focuses on California which experienced the biggest surge in brand-new house flippers – those who buy, rehabilitate (fix), and resell (flip) residential homes – compared to any other state in 2017. California was also LendingHome’s top state for loan originations in 2017.
LendingHome’s report also pinpoints California’s Top 10 flipping hot spots by county. Ranking first was Los Angeles County, where a whopping 25.71% of all houses purchased were flips. The Top 10 in order:
Executives at three of RealtyShares’ real estate crowdfunding counterparts—ArborCrowd, CrowdStreet and EquityMultiple—say the collapse of a player like RealtyShares is an unfortunate but inevitable growing pain in an evolving industry. Charles Clinton, co-founder and CEO of EquityMultiple, calls the RealtyShares situation a “natural blip.”
The fall of RealtyShares isn’t “an indicator of the health or the longevity of this industry,” Steen says. “It’s actually an indicator that the industry is maturing. In an industry like this—crowdfunding of commercial real estate—you’re going to have certain business models that survive and certain ones that might not.”
Plastiq, a San Francisco, CA-based provider of a solutions to pay bills by credit card, raised $27m in Series C financing.
The round was led by Kleiner Perkins with participation from DST Global. In conjunction with the funding, Kleiner Perkins general partner, Ilya Fushman, will join the Plastiq Board of Directors.
The company intends to use the funds to accelerate growth and roll out new services, develop and deepen its partnerships with key players in the financial and payments sectors, such as MasterCard and other major card brands.
Financial services comparison site SuperMoney is venturing into new territory this week with the launch of its student loan refinancing comparison marketplace. And since student loans are the largest source of unsecured debt in the U.S., with outstanding loan amounts totaling $1.53 trillion, now is as good a time as ever for the new endeavor.
The new marketplace aims to help students make smarter decisions when refinancing their existing student loans. By submitting a single application, users can receive actual rate quotes in real time from multiple lenders, including LendKey, CommonBond, and SoFi. Each offer transparently shows users a breakdown of monthly costs, payments, and fees so that they can make the best decision based on their circumstances.
2. Open a Home Equity Line of Credit – If you’ve been paying down your mortgage for a few years, you’ll have built sizeable equity into your home. Assuming you have decent credit, most banks will give you a line of credit based on that equity.
4. Look into Peer-to-Peer Lending – Peer-to-peer lending is another way to get funding with a comparatively low barrier to entry. Investors put their extra cash into a peer-to-peer lending platform so you borrow from individual investors rather than a bank.
6. Crowdsource the Money – If friends and family are sympathetic to your needs, you may be able to generate funds from them. It’s easy to collect money through crowdsourcing with platforms such as GoFundMe.
Today, Klarna, a leading global payments provider, announced a new collaboration with Gravity Blanket, creator of weighted blankets and sleep products engineered to naturally reduce stress and increase relaxation. Shoppers will now be able to use Klarna’s Slice it and brand-new Slice it in 4 products, which allow consumers to pay for their products in installments.
ArborCrowd, the only online platform that enables individuals to make equity investments in institutional-quality commercial real estate, announced today that its Co-Founder and Managing Director, Adam Kaufman, was named a HIVE 50 Innovator by Hanley Wood, the premier company serving the information, media, and marketing needs of the residential and commercial design and construction industries.
The prestigious HIVE 50 is made up of the top people, products, and processes that are leading the charge to inspire creativity, improve performance, and explore better ways to build. This year’s honorees were separated into five categories. Mr. Kaufman was selected as one of the top innovators in the “Capital” category for his role in co-founding and leading ArborCrowd, which provides accredited investors with access to institutional-quality real estate investment opportunities.
One company that isn’t quite doing that is Funding Circle, the platform lending company founded in the U.K. in 2010. After an initial public offering earlier this year, it’s publicly traded on the London Stock Exchange with a $1.6 billion market cap.
That’s a lower valuation than the company hoped for and that “less than giddy IPO,” as Bloomberg put it, has been seen as a cautionary data-point for other soon-to-be-public fintech lenders.
ZOPA’S chief executive has said that proposed investor marketing restrictions are appropriate for platforms that offer riskier manual lending opportunities but not for them.
Jaidev Janardana (pictured) said that when an investor is lending against one property or one business, this could be riskier and “we need to make sure investors are sophisticated when they make these decisions”.
A growth in the demand for low-cost investment services in the UK is driving new investor uptake in fintech robo-advisors, according to Boring Money research. Through Q3 2018, 800,000 new DIY investment accounts — where customers decide on investment choices without the help of financial advisors — were opened in the UK.
Of those new account openings, a third were with one of the UK’s leading fintech robo-advisor operators, including Nutmeg and Moneyfarm, compared with 11% a year ago. The total number of DIY investment accounts, inclusive of customers of robo and traditional platforms, rose to 4.8 million in the same period — a 22% uptick.
Klarna is searching for eight small and medium-sized enterprises to help them grow and take their businesses to the next level with its ‘Smooothest Store’ competition.
Open to businesses specialising in fashion, jewellery or lifestyle products, who are less than two years old, with an e-commerce store and a turnover in excess of 100,000 pounds per annum, the competition will help the winning up-and-coming retailers with a tailored combination of guidance, finance, and Klarna’s in-demand Pay later payment product.
Today’s customers are looking for transparency and speed. My credit card provider had years to collect data on my and had ample opportunity to contact me and explain what information they needed. Sadly they chose to wait for me to get fed up with their slow process. We see companies struggle everyday with the balance between calculated risk and customer experience. At Equiniti we have dealt with many similar situations in which we try to find the right balance for our client so that they can offer their client the credit they need in a safe and structured way without sacrificing speed. Perhaps it is time that I offer this service to my own bank. But I would make them ask me 3 times………
Peer-to-peer lending is growing in popularity among borrowers and investors but where could financial advisers fit into the picture? Paul Stallard has some thoughts on the matter.
Peer-to-peer lending is growing in popularity among borrowers and investors alike, offering a flexible alternative to traditional investment products. In particular, peer-to-peer lending is catching on among property investors, with platforms offering attractive returns without the associated hassle and risk of traditional buy-to-let investing.
Klarna has launched its own financing program for SME retailers in Europe. The new initiative is called Boost and is aimed to further support retailers in accelerating their growth. The company promises the application process will be simple and straightforward.
Klarna’s Boost is currently available in Austria, Denmark, Finland, Germany, the Netherlands, Norway and Sweden for selected merchants only, but it will be widely available in these seven European countries from the beginning of December.
The company explains the release by saying how cash flow is often one of the biggest hurdles for entrepreneurs and small businesses who want to grow further.
The consumer credit market in Sweden is a relatively large and growing market. The total loan volumes amount to approximately Bn EUR 23, distributed among 1.4 million individuals. According to the Swedish central bank, the average interest rate is 12.5% and credit losses are between 0.9% to 1.5% per annum.
The funding predominantly comes from Swedish banks and niche banks which are advanced in digitization and benefit from the Swedish population being used to managing their finances online. However, digitization has not contributed to improving competition or the conditions for consumers. Instead, net interest rates (rates after deduction of funding costs) have risen well beyond 8-10% and created the world’s most profitable banks with a return on equity often well above 30%.
Menē Inc. (TSX-V:MENE) (“Menē” or the “Company”), an online 24 karat investment jewelry brand, today announced its partnership with Affirm, which provides U.S. customers with a new option based on real-time credit decisions that allow them to split Menē purchases into monthly payments while receiving items directly following payment capture.
Qualified U.S. customers will be offered 0% APR loans for 3 or 6-month terms, while remaining customers will be offered 10-30% APR loans for 3, 6 or 12-month terms. For example, a $600 loan over six months at 0% APR would cost $100 per month. Affirm’s offering is in addition to Menē’s existing Harvest Plan payment program, which remains available to Canadian and other international customers.
It’s already home to fintechs like Bankaool, a challenger bank offering an annual interest rate of 3.75%; Conekta, an AI-powered platform develops that helps FIs in Latin America detect and prevent fraud; as well as CLIP, a Square Cash-like company that allows merchants to turn their phones and tablets into POS terminals.
The WSJ reports that a subpoena was sent to the SALT lending platform this February and the SEC is currently evaluating whether or not the ICO constituted an unregistered securities offering. SALT’s troubles do not end there. The SALT CFO has also filed a lawsuit against the company because favorable loans were given to company executives and family members.
The FinTech ecosystem is a financial evolution in itself. Right from money transfers to personal loans, from account management to asset management, FinTech is rapidly making its way into the lives of the tech-savvy microentrepreneurs of today. Just a few years ago, the only way to start a business was to approach a bank or an investor for financial assistance. Thanks to FinTech, the micro or small businesses now can choose to no longer go through the conventional methods to get microloans for starting, running or scaling up their businesses.
FinTech has opened a whole new world of opportunities for small businesses. They can now offer more and better services at a reduced price. But, if you want to not only sustain but succeed in your business, it is important that you embrace technology and stay up to date with the latest FinTech developments.
P2P (peer to peer) lending has grown popular in Indonesia. These online lenders promise quick loans with few questions asked. According to Indonesia Investments, credit disbursement through P2P lending in Indonesia has soared 204.7% this year.
Hundreds of fintech startups launched in Indonesia with variations of the P2P loan model; some of the older players are starting to see traction, while some others are facing various challenges due to increasingly stringent regulations.
The Financial Services Regulator, OJK, at some point put out a list of more than a hundred online lenders that it had banned for pushing into the market without going through the mandatory registration with the regulator, but that doesn’t appear to deter startups from participating in the lending gold rush.
Biz2Credit is working with HSBC Bank Canada to give Canadian small business owners quicker and easier access to apply for business financing.
HSBC eCredit is a digital-first approach to lending, which will allow small business owners to apply for financing online. Currently available by invitation in selected areas, HSBC eCredit will be fully available country wide in English December 2018 and in French the following month.
News Comments Today’s main news: Samsung to power Bank of America’s biometrics authentication pilot. FCA to overhaul mortgage applications. Aegon partners with Funding Circle. Yu’E Bao reduces upper limit. Klarna rebrands. Australian FinTech intros fintech jobs platform. Today’s main analysis: Business lending dynamics in the U.S. Today’s thought-provoking articles: SoFi Mortgage review. NAFTA talks may include discussion on fintech. Alibaba cashing in on […]
SoFi Mortgage review. AT: “Take this with a grain of salt, it’s one person’s opinion, but I find it interesting that the technology provides results lightning fast, but as soon as a human gets involved, the process slows down–considerably.”
Ting reduces customer churn with Affirm. AT: “Ironic, customers can buy a new smartphone on credit. Presumably, they’ll do this on their current smartphone. On another note, POS financing is heating up and I expect a huge competitive war for business among the players, which currently includes Affirm, Klarna, Amazon, Apple, and a few others jumping into the mix.”
Enterprise mobility and information technology company Samsung will launch a pilot program that enables Bank of America customers to log into their mobile banking app by taking a picture of their eye.
According to a report from American Banker’s Penny Crosman, half of BofA’s customers are using fingerprint authentication to log into their app, a feature the bank began offering in 2015. The other half of users login using their ID and password because they are either traditionalists, or hesitant to try the new login method for fear of a security breach.
Samsung debuted the iris recognition technology in March during its Unpackedevent. The company asserts that the technology is more secure than fingerprint scanning.
While consumer lenders still get the lion’s share of attention in the online lending universe, the reality is that there exists a great variety of non-bank fintech lenders and specialty finance companies who extend credit to businesses, and we are fortunate to work with so many of them.
As we can see in the graph above, our dataset contains the most data on business in Retail, Construction, and Health Care. Next, let’s see how our data are distributed geographically. As we can see, our dominant states are California, Florida, Texas, and New York.
As we can see, construction lending seems to have the highest indexed concentration in places such as Florida, Texas, and Colorado. Lending to retailers seems to dominate the Northeast. Healthcare lending is concentrated most highly in Florida.
Here’s my review of SoFi Mortgage, and how they handled the process of getting pre-approved and starting the lending process. I strongly recommend everyone shopping for a mortgage compare multiple lenders. Using a service like LendingTree can make that really easy.
SoFi Mortgage makes the process of applying for a mortgage online really easy.
After filling out the online application, we received our pre-qualification letter via email in minutes.
The Rest Of The Process Was Not As Smooth
Sadly, we had to wait too long to get into contact with a loan officer from SoFi to proceed with them. After we submitted our information, and I uploaded all the documents, it took about 3 days before someone from SoFi reached out to even work on the pre-approval.
As a result, many carriers and smartphone brands have started offering customers monthly payment options. After listening to its own customers, Ting – a mobile network and service provider with a quarter of million U.S. customers – decided to do the same and implemented financing solution Affirm.
Customers can visit Ting.com and shop for a new smartphone. Once they select their device, they’ll be asked to either sign into their existing Ting account or create a new account if they’re a new customer. The new account form asks customers to provide their name, email address, and phone number and invites them to opt in for Ting’s email and mobile notifications. They’ll also be asked to provide their address, so that Ting can verify if the brand services that area. When it comes to purchasing the device, new and existing customers can pay for the phone in full upfront via a credit card or Amazon Pay, or they can apply to pay monthly payments via Affirm. Then, customers will enter their shipping information, confirm their order, and complete the Ting portion of the checkout process.
The agreement enables Fifth Third to purchase loans originated through ApplePie Capital’s franchise loan marketplace, which provides franchise brands and their franchisees with a diverse range of financing options to efficiently grow their respective businesses. In addition, Fifth Third has also joined ApplePie Capital’s growing SBA lender network, and will receive referrals to SBA loan opportunities.
OppLoans, the country’s leading socially responsible online lender, has achieved the rank of #219 on Inc. Magazine’s 2017 list of the 500 fastest-growing privately owned companies.
In the past year, OppLoans has launched major subprime borrower advocacy initiatives like OppU, a free online personal finance curriculum. The firm has also made enterprise-level technology improvements that help provide the fastest possible application and funding process for customers. Additionally, OppLoans has expanded their C-Suite with deeply experienced, innovative and highly respected industry professionals in the roles of COO, CFO, and VP of Business Development and Partnerships.
Currently rated 4.8 out of 5 stars on Google and LendingTree, OppLoans provides financial opportunity to the underbanked population, through socially responsible products and an unwavering commitment to customer service.
Wannabe buyers who don’t have parents to help out have several options. They can borrow more than 80 percent of the purchase price with a first mortgage and pay private mortgage insurance. They can borrow some of the down payment with a home equity loan or line of credit.
Or they can go with a lesser-known option: giving up part of their future appreciation in exchange for down payment help from a government or private-sector program.
San Francisco’s Down Payment Assistance Program for market-rate homes is an example of government aid. First-time buyers can get up to $375,000 toward a home or condo in the city, but funds are limited and there are income restrictions. The application deadline this year is Aug. 21.
Unison, formerly known as First Rex, offers a private-sector alternative. There are no income restrictions and buyers don’t have to be first-timers, but they must live in the home, qualify for a loan and be in one of the 12 states (including California) where Unison operates.
In a typical Unison HomeBuyer deal, the buyer puts down 10 percent of the purchase price, gets 10 percent down from Unison and borrows 80 percent with a first mortgage, thereby avoiding private mortgage insurance. In exchange, Unison shares in 35 percent of any future appreciation or depreciation.
David Sacks: After PayPal I never thought I would get interested in payments again. But bitcoin is fulfilling PayPal’s original vision to create “the new world currency.”
A payment is just a credit to one account and a debit to another. That’s a database entry. We believed that, if we could get enough people to participate, money would never need to leave the system. PayPal could become the database of money.
But cryptocurrencies like bitcoin are now fulfilling that original vision. They are doing it in a decentralized way (with a decentralized database called the blockchain) whereas PayPal tried to do it in a centralized way.
Looking back in disgust, Schmelz now refers to the company as “snakes in the grass.” He’d soon learn he was charged 200 percent interest, and owed $27,000 for the full repayment, or 10 times his original principal.
He wasn’t alone. It is estimated that at least 120 Minnesota seniors and veterans have signed on with FIP and another lender: Future Income Payments, LLC, out of Delaware.
On Wednesday, Swanson held a news conference to announce that the state has filed suit against the two companies in Hennepin County District Court. The state’s lawsuit alleges that neither company is registered to do business in Minnesota, or licensed to make loans.
Last week’s tie-up between Acorns – the fastest-growing micro-investing app in the U.S. with over 2 million investment accounts – and Clarity Money, the rapidly growing personal finance app with 450,000 users founded by Adam Dell, brother of Dell Technologies CEO Michael Dell, is the latest in a raft of announcements by fintech startups determined to redefine personal finance.
Revolut, the app-based digital only bank, announced a partnership with pension manager PensionBee, allowing Millennials to combine their pensions in one plan, adding more pensions as they switch jobs. Starling Bank in the U.K. became the first in the country to partner with Transferwise, giving Starling customers direct, in-app access to TransferWise’s money transfer services. Stock trading app Robinhood, which already teamed up with StockTwits’ real-time social network for the financial and investing community, added TradeIt to its roster of partners, ensuring users can view brokerage accounts, place trades, and fund their account without exiting the experience, no matter which broker they use.
Even today, hard money lending is a fractured and inefficient market. PeerStreet aims to change that. PeerStreet is the first online platform that helps investors to invest in hard money loans.
A typical loan on PeerStreet has a maturity around one year. Over the course of the last several years, PeerStreet’s entire portfolio of loans has earned 7-12% annually after the investment fees (of up to 1%).
PeerStreet also encourages investors to maintain a diverse portfolio of loans. With a $1,000 per loan minimum, most investors can diversify into a nationwide marketplace without too much difficulty. In fact, PeerStreet even makes it easy to invest automatically. Investors just input investment settings, and PeerStreet matches them with loan investment opportunities.
Finally, all loans on PeerStreet are backed by a hard asset (real estate), and the loans typically have a great loan-to-value ratio. In general, investors will find LTVs between 60-70% of the property’s value. The max LTV on the PeerStreet platform is 75%. Most people would call this a low risk loan.
Worst Parts Of PeerStreet
First, to invest on PeerStreet, you need to be an accredited investor.
Another drawback to PeerStreet is that it’s hard for an outsider to estimate risk. Real estate is highly cyclical. We’re in an expansionary real estate market. That means that default risk on real estate loans is low right now. However, at some point in the future, borrowers will start to default on the PeerStreet loans. Investors have no expectations for how much they can recoup when a deal goes belly-up.
It’s my opinion that PeerStreet oversells the safety of their investments.
Finally, PeerStreet is an expensive platform. PeerStreet charges a servicing fee of 0.25-1% on every loan that you invest in. That means that if your loan yields 10%, you’ll receive a 9% interest rate.
The founder of online mortgage broker Trussle is in talks with the regulator about creating an industry standard for mortgage documents.
Ishaan Mahli, who founded the online broker in 2015, believes standardisation would lead to greater efficiency during the application process and better outcomes for the borrower, while eliminating biases towards lenders with a more simple process.
The plan would involve standardising the amount of time for which documents are required for certain cases – for example, three months’ payslips – as well as the document format.
It could also involve harnessing Open Banking technology – an online communication standard that will enable the secure sharing of customer information with third parties such as lenders.
Aegon has entered a strategic partnership with online lending platform, Funding Circle. In the first year, the move will provide a cash boost for 2,600 small- and medium-sized companies, and create a potential 6,400 UK jobs.
The four-year strategic cooperation between Aegon and Funding Circle(external link) marks the first time that a Dutch financial service provider of its scale will provide direct loans to small businesses online.
China is the largest internet finance market in the world estimated at over $100 billion for 2015. Their peer to peer lending sector is absolutely enormous while equity crowdfunding is relatively small at around $829 million in 2015.
Nesta, the UK based non-profit foundation that focuses on innovation, believes the UK should work towards creating a cross border equity crowdfunding alliance with China.
Nesta outlines recommendations for the two countries to cooperate more closely when it comes to crowdfunding:
Create a China-UK equity crowdfunding alliance – Boost communication between the two countries to compare best practices. Perhaps the UK Crowdfunding Association and the National Internet Finance Association could become the first bridge.
Regulatory Knowledge Sharing – Some of this has already occurred but knowledge sharing between the two countries when it comes to rules guiding internet finance is mutually beneficial.
Foster a data framework and establish standards – Having good data is a catalyst for transparency. Nesta believes this could be a first step in a global initiative.
Government Backed Pilot programs – Have UK issuers raise money in the UK and vice versa. Why not? As long as the diligence is there and the structure is approved Nesta sees this as part of a “China-UK Fintech Bridge.”
Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, announced its UK loan product, Sunny was recently crowned the “Treating Customers Fairly Champion 2017” at the 2017 Consumer Credit Awards in Mayfair, London.
Run by Smart Money People, the Consumer Credit Awards are the largest consumer-voted awards program in the UK consumer credit industry. More than 1,400 Sunny customers showed their appreciation of Sunny’s customer-centric approach by voting.
Earlier this month we told you how much is being invested in financial technology in the UK. Now a new report says big names in technology could be snatching up fintech start-ups in a possible buying binge during 2018.
A report by CNBC cited Daniel Döderlein, chief executive of Norwegian fintech start-up Auka, who believes the likes of IBM and Capgemini would likely be interested in mergers and acquisitions amid a surge in fintechs.
On 14th August, the capital limit on Yu’E Bao individual account was reduced from $37,450 to $14,980. However, the limitation was found useless！There are two methods to bypass the capital limitation.
Firstly, you can buy monetary funds in the ant wealth, choosing the payment of bank cards. The money will automatically return to the Yu’E Bao account after redemption, no matter if the limitation has been reached or not.
Secondly, you can immediately cancel the transaction after buying a product such as a money fund. In this case, the money would not return to the bank card, but going to the Yu’E Bao account.
August 16, “Jiu from this rich global” Jiufu international strategy release and Jiufu Ben Ben APP conference held in Shenzhen, in addition to the official release of Hong Kong, US stocks and other global market intelligence investment APP Jiufu Ben Ben, the conference also announced The future of Jiufu international strategy: Jiu Fu in the United States Silicon Valley investment in the chain chain company Wyre, and will set up AI laboratories; Southeast Asia, has conducted a thorough investigation, will be set up in Singapore, Southeast Asia headquarters. Combined with Hong Kong more than 30 years of Jiufu Securities, in order to form the United States Silicon Valley, Southeast Asia, Hong Kong “Trinity” overseas financial services system.
Talks to renegotiate the North American Free Trade Agreement (NAFTA) must include a discussion of new financial services, a Mexican negotiator said on Wednesday, singling out so-called fintech companies rapidly gaining ground in the region.
Talks to renegotiate the North American Free Trade Agreement (NAFTA) must include a discussion of new financial services, a Mexican negotiator said on Wednesday, singling out so-called fintech companies rapidly gaining ground in the region.
Locally in the U.S., Canada and Brazil, Euler Hermes will partner with specialized surety agents and brokers and will focus on contract and commercial surety. Contract surety bonds are a common requirement in the construction industry, where Euler Hermes offers bid, payment, performance, supply and maintenance bonds for mid to large contractors, while commercial surety bonds may be required by local and state law to comply with state or federal regulations.
Credit Suisse, for example, is well respected within the IT sector for being ahead of the curve in implementing digital transformation. The bank had started its revamp process out of Asia Pacific. According to Marco Abele, Credit Suisse’s digital transformation expert, the bank converted an old data center in Singapore into an innovation hub.
Citigroup, Banco Santander, and Goldman Sachs have completed some deals into fintech start-ups over the last five quarters. Another example would be BNP Paribas. The bank is planning to double the investment in technology over the next three years to adapt to changing consumer behavior and cut costs.
According to PWC almost 50% of financial services firms around the world plan to acquire fintech start-ups in the three to five years. BNP Paribas recently agreed to buy French digital bank Compte-Nickel for 200 million euros ($213 million), which was the biggest fintech acquisition ever in France according to a Bloomberg news report.
The team behind the highly successful Australian FinTech website have soft-launched their FinTech employment marketplace platform, Australian FinTech Jobs.
AustralianFinTechJobs.com.au is Australia’s only dedicated platform for FinTech companies and Recruiters to promote FinTech, financial technology, financial services, banking, legal and IT employment opportunities in Australia.
China’s e-commerce leader Alibaba Group Holding will bring a version of its hit smartphone-based payment platform to Japan as early as next spring, hoping the simple technology will convince many cash-reliant shoppers here to go digital.
The Japanese unit of Ant Financial Services Group, the internet giant’s financial arm, will offer a version of the Alipay digital payment system tailored for the Japanese market under a new brand. Shoppers will be able to load money into or link a bank account with a dedicated app on their smartphone, and scan QR codes issued by merchants to make a payment. Merchants can also scan codes displayed on a user’s phone to the same effect.
Simplii Financial will offer no-fee banking, mortgages and loans online and by phone, according to Mike Boluch, CIBC’s executive vice president of direct banking, innovation and payments. CIBC expects to take C$100 million ($78.4 million) of fees and charges before tax in the quarter ending Oct. 31 related to the transaction, the Toronto-based bank said Wednesday in a statement.
SelectCore will be rebranded as Fintech Select in an effort to continue expanding its financial payment services to its customers. The Company is pleased to confirm that it has signed an Agreement to license software as a service (SAAS) to enable peer-to-peer lending, including the option to outright purchase the source code.
Besides micro loans, the Company is also exploring other loan offerings that can be interconnected into the P2P platform from institutional entities and or private individuals. Our pre-paid card program will play a critical role within this new P2P platform, as it will allow borrowers to receive funds directly to their cards and/or mobile wallets.
News Comments Today’s main news: California SC finds arbitration agreement waiver unenforceable. BondMason first P2P provider to launch SIPP. China’s internet finance thrives as fraud fades. Marvelstone plans robo-advisor for family offices. Today’s main analysis: Real estate tech deals tick up. Today’s thought-provoking articles: 5 areas of fintech attracting investment. UK still fintech unicorn capital of Europe. Millennials favor search […]
Real estate tech deals tick up. AT: “I suspect most of this is being driven by RECF. Mortgage tech is starting to rise. PropTech is huge, and that includes tools for real estate brokers and investors including rental unit management.”
Why I don’t believe in the hybrid advice model. AT: “This is a position I’d expect of LendingRobot’s Emmanuel Marot. Although brilliant, LR and Marot cannot fight market forces. Nonetheless, I agree with his bottom line: Humans can spout meaningless justifications better than any robot, which is why the hybrid model is catching on. While investors think technology is cool, there is still that spark of meaningless human voice-in-the-head begging them to fear it.”
On April 6, the California Supreme Court issued a unanimous opinion in McGill v. Citibank, finding that a pre-dispute arbitration agreement was unenforceable to the extent it required the plaintiff to waive her right to seek public injunctive relief. According to the court, the right to pursue a public injunction constitutes an “unwaivable public right” under California law. Therefore, “a provision in any contract ― even a contract that has no arbitration provision ― that purports to waive, in all fora, the statutory right to seek public injunctive relief . . . is invalid and unenforceable under California law.”
The California court further explained that its partial unenforceability finding is consistent with the U.S. Supreme Court’s decision in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985). In that case, the Court stated that “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitrable, rather than a judicial forum.”
The court also acknowledged, but found no reason to address, the plaintiff’s related claim based on what is known under California law as the “Broughton-Cruz” rule, asserting that a request for a public injunction cannot be decided in arbitration. Finally, the decision remanded the case to the California Court of Appeals to consider ― if either party should raise the issue ― the question of whether the rest of the arbitration agreement remains enforceable in light of language contained in the most recent version of the underlying account agreement stating that, “if any portion of the arbitration provision is deemed invalid or unenforceable, the entire arbitration provision shall not remain in force.”
The decision of the California Supreme Court in McGill v. Citibank will likely be appealed.
In light of this decision, providers of consumer products and services should review their existing arbitration agreements to determine whether the consumer’s ability to pursue a public injunction or other “public rights” is completely foreclosed.
McGill v. Citibank also highlights the risks of including language in an arbitration agreement (or in any contract) stating that the agreement will be invalid if any portion of the agreement is deemed invalid or unenforceable. Given the impossibility of predicting how courts may interpret even well-settled questions of law, standard severability language is always preferable unless different language is specifically mandated.
At the same time, some of the steam has come out of the sector. Overall investment and merger and acquisition activity in fintech almost halved from a record high of $46.7bn in 2015 to only $24.7bn last year, according to KPMG.
Another negative factor was the governance scandal last year at Lending Club, the biggest online lender in the US, combined with disappointing performances by some of its rivals, which turned investors off peer-to-peer lending.
Total fintech investment in Asia inched up to a new record of $8.6bn last year, although the number of deals fell by more than 8 per cent. More than half the region’s total fintech investment came from one deal: Ant Financial’s $4.5bn funding round.
The launch of voice-activated assistants such as Amazon Alexa and Google Voice has opened up possibilities for making online banking easier for customers. Banks such as Capital One have already latched on to this trend.
Cyber security shot to the top of the boardroom agenda for banks after one of the biggest bank robberies in history was carried out by cyber thieves on the Bangladesh central bank via the Swift payments system in February 2016. The crooks made off with $81m that was on deposit at the US Federal Reserve.
Most big financial groups remain convinced of the potential for blockchain to revolutionise parts of their industry and several central banks are examining the potential for using the technology to create digital currencies. Venture capital investment in blockchain companies rose by a fifth to $544m last year, according to KPMG.
The insurance industry has been slower than other areas of finance to wake up to the digital disruption at its door. But recently start-ups such as So-sure, Friendsurance, Lemonade, Guevara and Brolly have emerged with plans to transform the sector. Venture capital investment in insurance technology companies doubled last year to almost $1.2bn, according to KPMG.
2016 was a banner year for real estate tech with over $2.6B in funding to the category across 277 deals. At the current run rate, 2017 could very well reach another consecutive funding high, even as deals are on track to come in slightly below last year’s total.
So far this year, real estate tech companies have received $733M across 61 deals. At the current run-rate investment activity is on track to reach $2.9B invested across 247 deals.
On a quarterly basis, deals have materially declined since Q3’16.
Funding, on the other hand, has increased in each of the last three quarters and Q1’17 received the second-largest quarterly funding total ever, behind Q2’16.
On paper, it looks pretty good: let the robot do the simpler stuff, like a modern-portfolio-theory allocation between a few ETFs, and have a human being intervene to provide more sophisticated and personalized advice.
In practice, I think it’s nonsense. If you believe the market is truly efficient, then there’s no point in using an advisor, robot or human. Just invest in a broad market ETF and be done with it (except for tax harvesting).
If you think the market is efficient-ish, then low cost optimization is the solution. Go robot. If you think you need an active manager, you should read the trove of statistical analysis that demonstrate you’re simply paying for someone’s yacht. Indexes beat stockpickers [92% of time]…
It does make sense for robo-advisors to move to the hybrid model, since it allows them to differentiate and de-commoditize their service, but for their clients, not so much.
Machine learning algorithms have become so good in the last 10 years, that any number-crunching and quantitative decisions a smart but junior employee can do, the machine will do better, faster, and cheaper.
Investors with at least $100,000 with Wealthfront can now borrow up to 30% of their balance for loans for anything except purchasing more investments on the firm’s platform, the company announced Wednesday.
Reuters reports loans will cost between 3.25% and 4.5%, and any money a client deposits into their account after taking out a loan will pay off the balance rather than investments.
Financial services firm Edward Jones today announced a multi-year partnership with SixThirty, a St. Louis-based venture fund that invests in financial technology (FinTech) startup companies. Backed by the St. Louis Regional Chamber, SixThirty was founded in 2013 and to date has funded more than 25 startups across the globe.
As part of the partnership with SixThirty, Frank LaQuinta, a general partner with Edward Jones, has joined the organization’s Investment Committee which evaluates the investment pipeline and selects FinTech startups that SixThirty invests in.
Pi Capital International LLC (“Pi Capital”) is pleased to announce that it was the exclusive financial advisor and placement agent to Money360, Inc. for a structured debt facility of up to $250 million. The financing vehicle is designed to allow Money360 to employ funding as it provides commercial real estate loans to its U.S. client base. The fund provides Korean investors with a short-duration, high-yield fixed-income instrument.
“The fund raise by Pi Capital will allow us to substantially increase our assets under management,” said Evan Gentry, M360 Advisors’ CEO. “We believe this gives us a competitive advantage with an anticipated $250 million investment from one of South Korea’s most reputable financial institutions.”
ApplePie Capital, the first online lender solely dedicated to the franchise industry, today announced the appointment of franchise industry veteran Ronald Feldman as chief development officer, as well as the acquisition of Funding Solutions, LLC, a well-established national franchise lending consultancy that specializes in SBA, conventional and equipment finance loans. Feldman and Funding Solutions’ managing partner Randy Jones will join ApplePie’s leadership team.
These additions position ApplePie’s financial platform to exponentially expand upon its hallmarks of speed, flexibility and efficiency with new product options, an expanded network of lending sources and an extraordinary wealth of franchise finance expertise for its growing list of franchisor partners. Currently, ApplePie serves more than 40 franchisors including Orangetheory Fitness, Jimmy John’s, Jersey Mike’s and Marco’s Pizza.
Responsible for growing ApplePie’s brand portfolio and contributing to product strategy, Ronald Feldman comes to the company with more than 20 years of experience in franchise leadership and franchise financing. He previously served as chief development officer at FranData, the industry leader in market research, and as a principal and co-founder of Franchise America Finance (FAF) and The Siegel Financial Group. Feldman was also an early franchisee of The Goddard School system. As an active advocate of the franchising business model, Feldman currently serves the International Franchise Association (IFA) as chair of the Supplier Forum Advisory Board and sits on both the Board of Directors and the Executive Committee of the association. Feldman was awarded the Sid Feltenstein MVP Award for service to the IFA’s Political Action Committee (FRANPAC) in 2013.
Unfortunately, some Millennial stereotypes are rooted in fact. A 2015 PWC survey showed that only 24% of us have basic financial knowledge, and even so, only 27% of us seek financial advice on saving and investing.
When it comes to jobs, we’re not the deadbeats that people assume. In fact, a 2015 Deloitte report found that 54% of Millennials had started or had planned to start their own businesses by year-end. Although we may work differently than generations past, many of us are passionate, entrepreneurial and looking to make a difference.
“Advisors need to understand how truly connected this new generation is to each other and to information.” When it comes to trusting a financial advisor, Kamine highlights this outsider oversight as a road block.
Millennials currently represent a meaningful fraction of U.S. wealth that will grow as baby boomers continue to pass down an astounding $30 trillion over the next 30 years. When this transfer of wealth happens, an estimated 66% of Millennials will fire their parents’ financial advisor, according to InvestmentNews Data.
This year, 86% of Millennials said they are interested in socially responsible investing, according to Morgan Stanley.
The Millennial Disruption Index reports 71% of us would rather go to the dentist than listen to what banks tell us. In our financial planning, we have shorter-term goals that we’re trying to align with the things we care about.
With an average age of 51, many advisors still build financial plans based on their view of a traditional life cycle with set ages for when we start a family, buy a house, climb the corporate ladder and retire. But their view is not our reality. Kamine adds, “Financial advice has been like a structured box without much creativity or understanding of the individual. Advisors need to become more dynamic because we’re revolting against structure. I’ve told my advisors I don’t envision buying a house for at least the next five years. And I’m definitely not focused on planning for retirement 40 to 50 years from now.”
The report, the first in a series on regulation in the fintech industry, focuses specifically on marketplace lenders, mobile payments, digital wealth management platforms and distributed ledger (also known as blockchain) technology.
While the GAO did not issue any recommendations in the report, it noted that regulation of these four subsectors was varied depending on the types of products or services offered and the way in which they are delivered to consumers.
College Ave Student Loans, the leading next-generation student loan fintech lender, has teamed up with America’s #1 College Life Expert Harlan Cohen to help families get comfortable with the uncomfortable when it comes to college and money. Hosted by Harlan Cohen, author of The Naked Roommate, the Naked Financial Truth Digital Tour will feature a series of free webinars and videos focused on financial advice, strategies and tips to help parents and students plan for post-secondary education.
The first webinar, “The 7 Biggest Financial Mistakes College Students Make (And How Parents Can Help)” will be held on Tuesday, April 25 at 7 p.m. ET. Registration for the webinar is free and available online at
These eight companies — which are required to have a presence in the region to receive an investment — will begin the 12-week accelerator on April 24, meeting with mentors and advisors selected to help guide them toward growth and fundings. They run the gamut of the financial industry, from creating data visualizations of personal assets to a student loan repayment benefit program. Four focus on putting financial technology to use solving social issues.
In the next several weeks Raymond James is setting its sights on rolling out a revamped suite of “longevity” planning tools. The updated software comes with the kinds of bells and whistles that advisors might expect from a nearly five-year-old package – a “new look and feel” as well as a “more conversational design,” as company execs put it.
Other notable enhancements, they say, include more flexibility for analyzing portfolio return patterns and capabilities allowing real-time updates as clients’ household budgets and retirement goals change over time.
Tamarack, a leader in providing independent software solutions in the equipment finance and commercial lending industry, has added Channel Partners Capital as its newest client to utilize Tamarack’s Lease/Loan Origination Accelerator on Salesforce.
Channel Partners, a leading provider of small business working capital loans, will benefit from added flexibility, streamlined operations and enhanced audit controls, as a result of using Tamarack’s Lease/Loan Origination Accelerator on Salesforce.
Tamarack’s Lease/Loan Origination Accelerator on Salesforce is a scalable solution offering users the ability to automate work queues,increase throughput of loans without additional head count and customize notifications from lead generation through to funding.
BondMason has become the first peer-to-peer service provider to launch a self-invested personal pension (SIPP) product. The service aims to offer investors a flexible and tax-efficient way to save for retirement.
The new retirement product, which selects loans across P2P lending platforms, will grant UK savers exposure to higher-return assets than traditional pension savings products. Starting from a minimum investment of £5,000.
MILLENNIALS are favouring search engines over professional financial advice when it comes to managing their own money, research claims.
A poll of more than 2,000 adults by Zurich UK claims 15 per cent of millennials, referring to those aged 18-34, are turning to search engines such as Google instead of seeking professional financial advice, more than any other age group.
Only three per cent of 35-44 year olds and nine per cent of those aged 45-54 and over 55 respectively, opt for web-based information.
Asked why they eschew professional help, one in five millennials cited confidence in their ability to sort their own financial futures as a reason for not initially seeking professional help, while 37 per cent felt they do not earn enough to need to speak to a financial adviser, and almost a quarter said they were too young.
High Street bank TSB said some loan providers make a “hard mark” on credit files when someone asks for a loan price or quote.
TSB chief executive Paul Pester said: “We estimate that consumers are losing out by as much as £400m each year, which is going straight into the pockets of aggressive loans providers. It is time the industry comes clean on these costly underhand tactics.”
P2P lending offers an innovative funding option for businesses – including developers – and is fast becoming the go-to option.
It’s essential that the development finance sector stays competitive and vibrant, and alternative lending allows that to happen. Far from just being a back-up for situations that the traditional lending sector can’t cater to, crowdfunding and P2P platforms can actually be a more efficient source of funding.
Achieving compliance will not happen overnight. Indeed, MiFID II is widely considered to be one of the most sprawling pieces of financial legislation ever devised, and thus it presents numerous challenges. One of which being that recording calls will become mandatory for all areas of financial advice.
Then, if you add GDPR (the EU’s General Data Protection Regulation), coming into effect in May 2018, into the equation, 2018 is shaping up to be a regulatory nightmare for financial services firms. Under GDPR, we all have a‘ right to be forgotten’ or a right to erasure of all personal information held on us by a particular company. This places a duty on companies to be able to quickly access and delete the information they hold on specific individuals, on request.
However, comparing the responses of IT professionals and those responsible for managing Risk & Compliance within a business shows IT teams have a better overall understanding of the consequences of non-compliance. 62% of risk and compliance managers admitted to not knowing a company can be fined up to five million euros or 10 per cent of annual turnover, compared to only 42% of IT managers and decision makers.
A stranger’s photograph appears on your smartphone screen, and you decide whether to give him or her a loan or not. The money is not yours, but instead is provided by microfinance organizations. That’s the main difference from traditional American P2P (peer-to-peer) lending, and with Suretly you can earn or lose depending on whether the recipient of your largesse proves to be a reliable borrower or not.
Suretly is geared exclusively to short-term loans of up to one month; in other words, those with the highest interest.
The money itself is loaned by the microfinance organization that the borrower applies to, but only if they attract enough sureties to cover the whole amount, plus interest. Users share the risks, and depending on whether the individual returns the money or not, they can lose or earn from $1 to $10.
On the app, borrowers are divided into seven categories from A to G depending on their trustworthiness. The higher the risk that the loan won’t be repaid, the higher the price of its surety. The maximum commission is $1.5.
Listed Australian deposit taking institution Goldfields Money (ASX:GMY) looks to be making good on its intention to become a leading player in the digital banking product distribution and BaaS market in Australia, announcing last week that it had signed an MoU with Singapore headquartered remittance fintech Instarem.
What is interesting about the MoU is the intent to move beyond remittance towards a broader banking play for cross-border SMEs and products orientated towards visa holders visiting or living in Australia.
The two companies should have a healthy market ready to capitalise on. According to the Australian Bureau of Statistics, over the last 10 years the proportion of the Australian population born in China alone has increased from 1.2% to 2.2%, coming in just behind New Zealanders and British immigrants. Those born in India currently make up 1.9% of the population, while citizens from the Philippines, Vietnam and Malaysia collectively add up to further 2.7%.
Migration isn’t going away. And the degree to which an individual’s assets are spread across countries is also on the increase thanks to globalization.
China has four large state-owned banks, and state-owned enterprises generally have easier access to financing. Many small companies are troubled by the financing bottleneck, creating pent-up demand.
Meanwhile, working-class families struggle to figure out where to invest their savings to seek higher returns, and many of them move money online. The country, home to the world’s biggest online population, also has a number of groups, such as college students, who are underserved by banks.
By March 2017, 3,607 Chinese P2P lending platforms had run into trouble or been forced to close, with only 2,281 platforms in normal operation.
On top of P2P lending, Internet finance also covers business such as third-party online payment, crowd funding, and other financial services.
Risk caused by the Internet finance industry has wide repercussions. Some P2P lending platforms resembled hybrid financial institutions providing clients with various financial services online, analysts said.
Businesses such as P2P lending, Internet-based insurance, third-party online payment, and online asset management were among key areas for strengthened supervision, industry observers said.
Internet finance last week appeared on the top banking regulator’s list of ten most important areas for enhanced risk control, with targeted measures to be taken to stem emergence of a financial crisis.
Wang said 2017 will be a watershed year for Chinese Internet finance as the rules are tightened, bringing the industry out of the wilderness.
Singapore-based Marvelstone Capital plans a robo advisor platform for the under-served family office market in Asia.
The platform is being developed with Singaporean fintech startup Smartfolios, and will be launched in the third quarter of 2017. It will be available on desktop and mobile for Marvelstone Capital’s clients.
Marvelstone will target family offices based in Singapore, Malaysia, Indonesia, Myanmar, as well as India. The company points out that Malaysia is an important market and Cho added: “It is a huge market and the culture is quite unique as well, there’s a huge Shariah-compliant market, so it is definitely one of the most important markets for us.”
News Comments Today’s main news: Colorado targets Marlette, Avant on ‘True Lender’ grounds. CRB sues Colorado. SoFi raises variable student loan refi rates. Kabbage extends $3B in funding to over 100K small biz customers. RateSetter adds expected losses committee. P2P Global Investments considers change of loan fund manager. Dango RECF platform celebrates 1M investors. Today’s main analysis: International P2P lending statistics. […]
Colorado files against Marlette, Avant for ‘true lender’ status. GP:” The 2nd circuit created waves in Madden vs Middland. California and West Virginia also had their true lender cases with conflicting decisions in fact. Now the state of Colorado is relying on those decisions to sue Avant and Marlette.” AT: “This smacks of the bank attack against credit unions a few years ago. States attorneys general are often used to wage political attacks against challengers in commercial sectors. I doubt it will work.”
CRB sues the state of Colorado. GP:” I think Cross River Bank has no choice but to defend their business model because they are otherwise facing extinction. It is a bold move that should get them great visibility with the entire country, the press and probably all the way to the Supreme Court. I think this action had to be taken, I am glad CRB took it, and we support their decision to sue the state of Colorado. We strongly believe that if the federal prehemption rules don’t have weight the US will not be a competitive business environment anymore.” AT: “Cross River Bank fights back to protect its interests. I can’t blame them.”
ApplePie Capital CEO makes MPL success look easy. GP:” The key to the success here was to focus on a very large niche market that was underserved.” AT: “I like to hear women in business talk about their gender as an asset instead of a liability.”
Jamie Dimon pushes for simpler bank regs. GP:” Given the Trump administration is close to Wall Street and Jamie Dimon’s reputation, I would expect that his view will carry a lot of weight and will be a good indicator of the best case scenario from JP Morgan’s bank point of view. Certainly a must read.” AT: “As long as they aren’t protectionist in nature and consider the innovative models of digital challengers, let’s get simple.”
On February 15, the Colorado Attorney General filed substantially similar, separate amended complaints in the U.S. District Court of Colorado against Marlette Funding LLC and Avant of Colorado LLC, alleging violations of Colorado’s Uniform Consumer Credit Code based on “true lender” and loan assignment cases. Both actions were originally filed in state court on January 27, 2017, and both were subsequently removed to federal court — on March 3, 2017 and March 9, 2017, respectively. In each instance, the complaint cites CashCall, Inc. v. Morrisey, 2014 W. Va LEXIS (W. Va. May 30, 2014), and Madden v. Midland Funding, LLC, 786 F.3d 246 (2d Cir. 2015), as legal authority for claims alleging usury and other violations of Colorado’s Uniform Consumer Credit Code.
The amended complaint filed in Mead v. Marlette Funding LLC d/b/a Best Egg asserts that Marlette paid all costs, including legal, marketing and other expenses, incurred by Cross River Bank in originating Best Egg loans. In addition, the complaint asserts that Cross River “bears no risk that it will lose its principal in the event consumers default on the Best Egg Loans that it sells to Marlette or to Marlette’s non-bank designees” because: (i) Marlette maintains a bank account in favor of Cross River in the amount of Marlette’s anticipated purchases; (ii) Best Egg loans originated by Cross River are sold to Marlette within two business days; (iii) the parties’ contract specifies that Cross River has no liability to Marlette for sold loans, and (iv) Marlette is obligated to indemnify Cross River “against any claim that any aspect of the Best Egg lending program violates the law.”
The amended complaint filed in Mead v. Avant of Colorado LLC, in turn, similarly asserts that Avant and not WebBank, which originated the subject loans, bears all cost and expenses, including the costs of evaluating loan applications and credit reports and the costs associated with dispersals of loan proceeds.
Cross River Bank Sues State of Colorado (Over the Transom), Rated: AAA
On April 3rd, Cross River Bank filed a Declaratory Judgment Action (Federal District Court) against the State of Colorado to protect its federal statutory and contractual rights to freely extend credit and to freely sell those loans on a nationwide basis
Previously (in January 2017), the Colorado Attorney General sued Marlette Funding in an attempt to prohibit Marlette from enforcing loans validly made by Cross River and validly sold by Cross River to Marlette
Cross River filed the declaratory judgment action in support of Marlette Funding (an MPL partner), and the broader bank-platform model
According to Cross River General Counsel, Arlen Gelbard, “the Colorado Attorney General is attempting to undermine the concept of federal preemption, and with it 150-years of established banking law.”
More specifically, Colorado’s action violates Federal Deposit Insurance Act (Section 27) and National Bank Act, as well as the “valid when made” doctrine
“It is clear to us that Colorado’s lawsuit against Marlette intentionally did not name Cross River as a party because Colorado knows that Cross River’s actions are protected by its status as a state-chartered, federally regulated Bank, which affords complete preemption over state law”
The Issue – Federal preemption/uncertainty:
The federal preemption provisions which allow small banks like Cross River to compete with larger entities, have come under attack by several states and in some recent court cases such as Madden v. Midland Funding and other so-called “True Lender” cases.
While we believe these cases were wrongly decided as a legal matter, the broader impact has been to encourage states and other plaintiffs to disregard or undermine key legal doctrines of federal preemption and loans as being “valid when made”, leading to market uncertainty.
The characteristics of the Cross River model are very different from many others in the marketplace, where the named lender has little to no involvement in the origination process and retains no “skin in the game”
This lack of certainty about what loan terms apply to subsequent purchasers has broad, adverse ramifications for US banking and financial markets. Specifically, certain investors have moved away from this asset class, which has reduced liquidity in the market.
“Although the action taken by the Colorado Attorney General is being positioned as one to protect the consumer, the actual result will likely have a negative impact on consumers and small businesses, as their access to this important source of credit is significantly reduced.”
The Federal Reserve’s interest rate increase last month is starting to show up in some loan products including student loan refinancing. Fixed rate borrowers are safe for now, but those with variable interest can expect to pay more.
As of April 1st the interest rate on a variable student loan at SoFi increased both on the low and high ends of the range. Borrowers will now pay anywhere from 2.565 percent to 6.490 percent interest on a variable refinance loan. That compares with 2.365 percent to 6.29 percent interest just a month ago. The interest rate on SoFi’s fixed rate products held steady at 3.375 percent to 6.74 percent from March to April.
Kabbage®, a pioneering financial services, technology and data platform, announced it has extended more than $3 billion to small businesses across all 50 U.S. states, covering every industry. The company has also now served over 100,000 small businesses through its platform, representing the largest customer base of any online small business lender.
“We have gained a foothold within the industry by partnering with 42 brands to date. Moving forward we will continue to innovate…”
Erin: You recently signed new investors plus funding capital, thus standing out in a challenging market. Please share details about your MO. How long did it take to raise the money?
Denise: It took five months. The two main sources of funding we closed were new strategic partners and existing investors. Our strategy was to continue to tell our story and educate investors about franchise debt as an asset.
Erin: Please share your experience about dealing with a prominent Bay Area VC saying, “You don’t look like Fintech.”
Denise: Statistically, there are far more men running fintech companies, clearly there are some biases out there around that. A study released by Peterson Institute for International Economics in 2016 found that “An increase in the share [on executive teams and boards] of women would be associated with a 15% rise in profitability.” At the end of the day, you want people in your board room who are supportive.
Erin: You have spoken quite positively about your relationship with Fifth Third. How and why does ApplePie’s relationship with this bank differ from others?
Denise: As opposed to our other loan purchasers, Fifth Third has made a strategic investment in our company and holds a stake in the growth of our business. They co-led our B round with QED Investors, with whom they have now also partnered to make strategic investments in VC-backed fintech companies. They have a long term vision for our industry and provide their expertise to create better financial solutions and a superior experience for our borrowers.
Erin:ApplePie Capital’s loans are backed by personal guarantee and unsecured. Personal assets are not required to back loans. Tell me more…
Denise: In franchising, there is a blueprint for the business owners to follow, in terms of cost analysis and every other aspect. This is measurable and people have a path to multi-unit ownership. We look at each brand and evaluate the sustainability of the business model, which has proven itself over the last 25 years through historical SBA data.
5W Public Relations, one of the 15 largest independently owned PR firms in the US, has been named PR Agency of Record by Sharestates, an online real estate investment marketplace that is an industry leader in crowdfunding for individual and institutional investors.
Real estate crowdfunding has proven a popular choice for one of the most fickle investing groups in the marketplace: Millennials.
On the surface, it seems improbable. Millennials investing in real estate? This is a group that has been loathe to purchase homes, with less than a third of Millennials becoming homeowners compared to 64 percent of the general population. After a little analysis, however, there are powerful reasons why real estate crowdfunding appeals to Millennials—enough that more are certain to join the crowd of investors in the coming years.
The stereotype, of course, is that Millennials are all underpaid with limited skills and few opportunities. That’s not reality, but even if it were, real estate crowdfunding has very low barriers to entry. Some of the best and most successful crowdfunding portals allow for investment minimums as low as $5,000. That lets Millennials get into the real estate investment game much earlier than previous generations.
Second, real estate crowdfunding is an investment option that allows Millennials to bypass banks. Having come of age during the Great Recession, many Millennials don’t trust financial institutions or Wall Street firms. They do, however, see the need to protect their money from the kind of financial breakdowns that hurt their parents’ retirement plans nine years ago by investing in hard assets. Real estate crowdfunding offers the chance to do just that.
On March 24, 2017, shareholders of PayPal Holdings Inc., the parent company of mobile-payment provider Venmo, filed a derivative suit against its directors in the District Court of Delaware. A derivative suit is a form of class action in which shareholders can sue company officers or directors on behalf of the company.
The plaintiff shareholders claim in the suit that the directors of PayPal willfully or recklessly caused PayPal to make false or misleading statements which led to direct damages against PayPal. The false and misleading statements are alleged to have been made in PayPal’s quarterly reports, annual reports, and proxy statements which failed to disclose any of the alleged unfair and deceptive business practice or the fact that those practices would lead to increased regulatory scrutiny.
AutoGravity, the FinTech pioneer transforming car shopping and finance with advanced mobile technology, today revealed that over a quarter million users – more than half of whom are millennials – have downloaded AutoGravity iOS and Android apps for car shopping and financing. AutoGravity also confirmed that its network of partner car dealerships has grown to more than 1,400 franchise dealers.
Since launching in 2016, AutoGravity has achieved significant growth across the United States, securing partnerships with the nation’s top automotive lenders, as well as four of the top five national dealer groups, representing all new and used car brands available in the country.
New cars remain popular with boomers. AutoGravity data shows two-thirds of car shoppers ages 50+ who pursue financing do so for new vehicles. In contrast, only half of AutoGravity car shoppers ages 18 to 25 who pursue financing do so for new vehicles
Japanese brands perform in California. Japanese economy and luxury car brands are more searched relative to American brands in California (as compared to the US overall)
Economy cars continue to be a popular choice. Economy brands rank in the top four most searched for vehicles across the US – luxury car brands round out the top seven
Millennials more cost sensitive than Gen X. Among car shoppers seeking financing on AutoGravity, millennials look to borrow ~15% less (finance amount requested) and seek to contribute ~25% less (cash down payment) relative to car shoppers ages 36+
The robo — once the No. 3 retail player behind only Wealthfront and Betterment — no longer takes assets to millennials.
Standing up for retail and millennials was Zhang, a millennial herself, who questioned whether Roy and Ciancolo were being unduly pessimistic in capitulating to established players.
Jemstep had a brief period where it went for retail business but veered quickly to the B-to-B market. “Can somebody [create a viable B-to-C robo advisor]?” Cianciolo asked. “Sure but you’re taking double and triple risks.”
J.P. Morgan ChaseJPM 0.33% & Co. Chief James Dimon laid out his wishlist of regulatory changes in his annual shareholder letter Tuesday, calling for simpler and better coordinated rules that could help to spur more lending and in turn economic growth.
Any changes are likely to help the bank. Mr. Dimon wrote that the “anticipated reversal of many negatives and the expectation of a more business-friendly environment” in addition to the bank’s results are among the reasons its stock price jumped about 30% in 2016.
Mr.. Dimon has previously said that rules should be coordinated among agencies, simplified and consistent, but in Tuesday’s letter spelled out what that meant for the first time.
He said banks have too much capital and that could be used instead to safely finance the economy.
Mr. Dimon reiterated that the so-called “gold plating” of international standards by U.S. regulators should be eliminated. Making U.S. rules stronger than international rules was in some cases a priority of Federal Reserve Governor Daniel Tarullo, who was the central bank’s regulatory point person but is stepping down this week.
Mr. Dimon also suggested reforms to the mortgage market since the housing sector has been “unusually slow to recover.”
Today, we are thrilled to announce that we’re partnering with NerdWallet to help more small business owners access fair and affordable financing. According to the Federal Reserve Bank, only 1 in 5 businesses that apply for a loan from a big bank are approved.
Together, we’ll create resources, guides and webinars to support the growth of businesses. In addition, entrepreneurs will now be able to access financing from Bond Street via NerdWallet’s Small Business Loan Tool.
Leverage PR, a prominent marketing firm engaged in the crowdfunding and Fintech sector, has been sold to Caliber Corporate Advisors. Founded by Joy Schoffler, a well-known and highly visible participant in the emerging industry of financial innovation, shared the news with Crowdfund Insider, explaining she expects to remain engaged with the firm but in a different role.
Leverage PR was founded in 2010 and was the first marketing firm to recognize the potential of alternative finance.
RATESETTER has set up a new committee on expected losses as part of a review of the way it monitors and reports on credit risk.
The panel, which will come into effect later this month, comprises the peer-to-peer lender’s chief executive Rhydian Lewis, its chief finance officer Harry Russell and various heads of consumer and commercial credit risk.
Boosting expected losses data is the latest of a batch of strategic changes RateSetter has put in place to price risk more accurately following higher-than-expected losses on its 2014 and 2015 loans.
The UK’s first peer-to-peer loan fund is to review its investment manager as a swath of funds struggle to generate returns from the emerging asset class.
The listed fund, P2P Global Investments, buys loans from websites matching interest-paying borrowers with lenders in the UK, US, Europe and Australia, as well as holding stakes in the platforms.
It is currently managed by MW Eaglewood Europe, an asset manager majority-owned by UK hedge fund Marshall Wace. In a short announcement to the stock market on Tuesday, the board said it would review the arrangement following discussions with Eaglewood and “significant shareholders” and would update the market in due course.
Oakam has enhanced its mobile app with the launch of Oakam Grow, a new feature that uses gamification to make consumer finance more engaging, rewarding and inclusive. Oakam Grow builds on the UK-based consumer lender’s application of behavioural science to encourage the development of positive credit habits, and supports its strategy to bring digital disruption to the largely analogue micro-credit industry.
Oakam Grow gamifies the experience for Oakam’s mobile app users through the application of social currency theory, which enables customers to share in the financial upside of their responsible credit behaviour. Customers earn points when making repayments via the app or referring friends, redeemable for loan repayments, cash-back, store vouchers, lower rates on future loans, or to socially vouch for friends in the loan application process. Oakam’s award-winning mobile app first launched in 2015, and today more than 55 per cent of its customers are regular users. The addition of Oakam Grow will further drive app downloads and engagement.
Oakam has seized on the opportunity to disrupt the £1.8 tn global micro-lending industry through the use of AI, machine learning and cognitive science. The century-old industry has seen little innovation since its founding and today relies on the same analogue processes that keep cost-to-income ratios above 50 per cent, and prices high for consumers. The industry’s network of around 200,000 doorstep loan agents globally also leaves consumers with poor or no credit history, vulnerable to misleading offers and predatory practices.
Oakam’s omni-channel model, comprising its digital properties and UK retail network, confronts both the issues of inefficiency and consumer protection.
Against a backdrop of rising inflation and continued low interest rates, it is no surprise that a growing number of the UK’s financial advisers are looking for ways to make their client’s money work harder.
And there is one solution in particular that has caught the attention of eagle-eyed advisers: peer-to-peer (P2P) lending.
Assuming current Bank of England inflation at 2.3 per cent, according to latest figures, and interest rate forecasts, money deposited in the average high street savings account today will shrink in real terms after both one and two years.
In fact, some high street bank cash savings accounts are offering just 0.01 per cent in savings – less even than the current Bank Base Rate of 0.25 per cent.
Even in its slowest year yet, 2015, the sector grew by over 80 per cent according to one report (Nesta, Pushing Boundaries: the 2015 UK alternative finance industry report).
P2P lending is likely to grow even faster as more and more P2P lenders receive their full FCA authorisation – heralding the arrival of the ‘Innovative Finance ISA’ (IFISA), which will almost certainly add to the momentum the sector is experiencing.
The result of the Swedish government’s tech drive of the 1990s is that while Silicon Valley may be the undisputed champion of the world when it comes to producing unicorns, Stockholm comes a close second. According to SparkLabs, the seed-stage fund, the Californian city has produced 10.7 unicorns per million inhabitants, the Nordic city produced three and Tel Aviv, which came third, birthed 1.2. So it’s no wonder the European Digital City Index ranked the metropolis as Europe’s second best city after London when it comes to supporting its digital entrepreneurs. “In Stockholm, we’re really freaking good,” says Stark.
But even though access to a solid infrastructure has proven vital in fostering this thriving entrepreneurial community, it isn’t the only factor. Equally important for the success of Sweden’s startups is the fact that that the nation has a population of just under ten million, which means new enterprises have to be thinking about international expansion from the get-go.
The growing influence of alternative capital is most evident in the US — in April 2015, nonbank lenders accounted for more than half of new government-backed mortgages. Banks are still the biggest lenders in Europe, but rivals are emerging. Many of the new players are linked to the securitisation industry, where loans are packaged up and sold on as bonds to capital markets investors.
Today one of the largest users of securitisation in the UK is not a bank. The Northview Group, which writes mortgages under the Kensington brand and is funded through securitisation, describes itself as a nonbank challenger lender.
A wave of nonbank lenders, including companies such as Munt and Dynamic Credit, have appeared in the past few years. These players now account for close to a fifth of new Dutch mortgages, according to IG&H, a consultancy. This is up from almost nothing just a few years ago. The companies take capital from institutions and lend to homeowners.
Technology companies that facilitate lending between investors and businesses make up another area of growth in shadow banking, and they are becoming more adventurous in the services they offer.
Funding Circle is one of Europe’s best known peer-to-peer lending platforms, where retail users can invest in loans made online. It lends £100m a month in the UK and is expanding in Europe.
As with other forms of shadow banking, European P2P lending lags far behind the US market. Investors who use Funding Circle, which is also active in North America, said they were disappointed last summer with the performance of US loans written by the company. The concerns followed losses that investors made on P2P loans securitised by OnDeck, a nonbank lender.
Peer-to-peer (P2P) lender SocietyOne has announced a new lending record, passing the $250 million lending mark in March of this year. Part of the lender’s success is due to increased demand for its two agri-lending products, which, combined with a surge in personal loans over the post-Christmas and New Year period, saw an additional $45 million lent to customers.
Growth in China’s peer-to-peer lending sector has proven resilient in the face of new regulations and a year-long crackdown by authorities on online financing, with total P2P loans blowing past the Rmb900bn ($130.7bn) mark last month.
Outstanding P2P loans came to Rmb920bn at the end of March, according to new figures released today by lending platform Wangdaizhijia.
Month-on-month growth in outstanding loans slowed compared to before the new regulations were introduced in August, from 5.7 per cent in July 2016 to 4 per cent last month.But when viewed in renminbi terms, growth has ratcheted up, with the industry tacking on an average Rmb35.6bn a month in the seven months since regulations were introduced, compared to an average rise of Rmb29.1bn in the seven months ended August.
Peer-to-peer lending in China is at an inflection point as state regulators aim to transform it from a “Wild West” industry rife with fraudsters into a respectable market in which legitimate lenders can offer funds to willing borrowers.
With their offer of attractive fixed returns over short periods, P2P investments appear similar to saving products that reputable commercial banks offer as an alternative to low rates available for deposits. P2P yields are typically higher than those available from banks, making them an easy sell to investors.
Since 2011, 3,556 platforms have collapsed, according to Online Lending House, a website that tracks the sector. In a third of the cases, law enforcement agencies closed the platforms or their owners or managers simply disappeared.
Dango estate, the now five months old Singapore based investment platform is growing by leaps and bounds. The mood at their three offices around the world was very high yesterday as they celebrated the 1,000,000’th investor on the platform.
Dango estate has achieved great success in the crowdfunding industry in the shortest time, the platform has already funded more than $500,000,000 in loans worldwide and delivered over $350,000,000 in principal and interest to investors, with yields as high as 10%.
News Comments Today’s main news: PRA resets FSCS limit at 85K BP. SoFi double downs on mortgages. Today’s main analysis: High-yield bonds outperform investment grade. Today’s thought-provoking articles: ApplePie podcast on franchise financing in MPL. Dianrong hits year-on-year increase of 148%. FinTech lending opening opps for SMEs in Indonesia. United States Mortgages take center stage at SoFi. AT: “It’s unclear […]
Social Finance, the online lender that made its name refinancing student loans for high-earning millennials, is doubling down on mortgages as rising interest rates are expected to make originations scarcer.
The company says it has endured by eschewing the strategy of some of its competitors in favor of product diversification and building up capital.
With interest rates expected to rise in 2017, loans to purchase homes will find stronger demand than mortgage refinancings. SoFi says it’s well suited to compete in such an environment — roughly two-thirds of its mortgage originations are purchase loans.
Beyond product offerings, SoFi is exploring the potential applications in mortgages of new technologies such as blockchains — the distributed, auditable, cryptographically secured ledgers that underpin bitcoin and other digital currencies. The company is among several groups studying whether these systems offer a better way to track ownership of real-world assets — in this case, real estate.
SoFi will seek growth in mortgages partly by entering new markets. It began marketing to consumers in San Francisco, where its earliest student loan product customers were.
Now, it is picking new markets based on demand for its primary jumbo product.
So far, SoFi has received licenses in 27 states with the addition of New York.
Next on its list is Massachusetts — eventually the company wants to be licensed in all 50 states.
Morningstar Corporate Credit Research Highlights (Morningstar Email), Rated: AAA
Since the beginning of the year, the average corporate credit spread of the Morningstar Corporate Bond Index, our proxy for the investment-grade bond market, has tightened 1 basis point, whereas in the high-yield market, the credit spread of the Bank of America Merrill Lynch High Yield Master Index has tightened 19 basis points. Between tightening credit spreads and a slight rebound in Treasury bonds, fixed-income securities have performed well. Year to date, the Morningstar Corporate Bond Index has risen 0.53% and the high-yield index has risen 1.08%. However, risk assets with higher betas have risen even higher; for example, the S&P 500 has risen 1.6% over the same period.
At these levels, both investment-grade and high-yield corporate bonds are trading much tighter than their long-term averages, and the S&P 500 is only slightly below its all-time high. Currently, the average spread of the Morningstar Corporate Bond Index is +127, which is 41 basis points tighter than its longterm average of +168 since the end of 1998. The average spread of the Bank of America Merrill Lynch High Yield Master Index is currently +402, which is 178 basis points tighter than its long-term average of +580 basis points since the end of 1996. As a point of reference, the tightest that the Morningstar Corporate Bond Index has ever traded was +80 in February 2007, and the tightest the high-yield index registered was +241 in June 2007.
So it’s very important that the brand know how to select operators.
The second is that they know how to select and carve out the United States’ for territories because if you think about the number of people that need to support and purchase goods and services in an area, you have to know that that business is located in a spot where that’s going to be a positive unit economic situation because that’s how franchisees make money. When the franchisee makes money so does the parent franchisor because they’re paid in royalty fees off of the revenues of those units. So it’s very, very important that they get those two things right and there’s aligned incentives in that.
The third thing they have to do is franchisors have to support their franchisees in many ways; training, the blueprint for how to start that business, how to market in the area, advertising dollars for national marketing or local marketing. They have to provide a lot of ongoing support to make that franchisee successful and so we interview, we have a very multi-dimensional screening process for the franchisor and then they in turn screen their potential operators and many franchise businesses like to have an operator that opens more than one unit because they’re not training someone twice and they’re really getting leverage. We like those too because they’ve already shown that they can succeed in one location. So it’s a very interesting model because of the leverage points you get all the way through the system.
State estimated to be future No. 2 market for SoFi
After roughly a year to get finalized, SoFi officially received its license to lend in New York, which is one of the most difficult states to acquire a license in, Michael Tannenbaum, SoFi’s chief revenue officer, said in an interview.
After roughly a year to get finalized, SoFi officially received its license to lend in New York, which is one of the most difficult states to acquire a license in, Michael Tannenbaum, SoFi’s chief revenue officer, said in an interview.
However, he noted that there are a lot of nuances to New York licensing and not too many out of state lenders receive approval.
It’s a very concentrated market that already has an awareness of SoFi and will likely be as large as California in business, which is SoFi’s No. 1 market, he noted. Washington State is slated as SoFi’s No. 2 market right now. SoFi is currently licensed in 29 states, also jumping into Montana recently.
From here, Tannenbaum said Massachusetts would be the last remaining big state that SoFi needs to jump into, pointing out the potential Boston could bring, especially since SoFi already has a solid student loan base there.
HomeUnion, a new online real estate management platform that helps landlords invest in property and then rent it out, has published their list of top Single Family Rental (SFR) markets in terms of yield. Cleveland is the best market, according to HomeUnion with yields of 10.9%. Meanwhile, hot metropolitan markets like San Francisco and Los Angeles are at the bottom of the yield barrel (Orange County is at the very bottom).
Alternative investment consultant acquisitions in the past 12 months include:
nGeneral consulting firm Pavilion Financial Corp. acquired alternative investment consulting firm Altius Holdings Ltd. in September. Pavilion already purchased Sacramento, Calif.-based private equity consultant LP Capital in 2014. Pavilion now has $60 billion in alternative assets under advisement.
nSeattle-based consultant Verus Advisory Inc. closed its acquisition of San Francisco-based private equity consulting firm Strategic Investment Solutions on Dec. 31, 2015. The combined firm has responsibility for more than $380 billion in assets under advisement. Eight months earlier, Verus started bulking up its alternative investment capability when it contracted with hedge fund and private credit consulting firm Aksia LLC to gain access to its hedge fund investment team and due diligence reviews.
Larry Chiavaro, Executive Vice President of First Associates Loan Servicing will be moderating two panels at the iiBIG Marketplace Cloud Lending Summit and Expo on Thursday, January 19th.
The Funding & Liquidity in Marketplace Cloud Lending session will feature Chiavaro and other industry leaders, providing insights into securitization, working with institutional investors, crowdfunding, secondary markets and more. The Loan Origination, Servicing & Collection Solutions for Cloud-based Marketplace Lenders session will delve into the latest developments and best practices to increase efficiency and maximize portfolio performance.
The Prudential Regulation Authority (PRA) has announced its intention to raise the level of coverage provided by the Financial Services Compensation Scheme. In a newly published policy statement, after factoring in feedback from interest parties, the PRA has proposed to reset the deposit protection limit to £85k as of 30 January 2017.
When the scheme’s limit was lowered to £75k in July, RateSetter CEO Rhydian Lewis said that it only strengthened the case to “refresh the FSCS”. But is the resetting of the limit to £85k bad news for peer-to-peer lending?
The Bank of England dropped the base rate to the historic low of 0.25 per cent in August. The peer-to-peer lending industry was overwhelmingly positive in reacting to the move, however a number have since been forced to adjust their own rates in the context of increasingly competitive credit markets in the UK.
Flender has been in development for the last two years and is built around harnessing the power of social networks, both online and offline, to help individuals and businesses raise capital.
He said: “We were really shocked to discover how big that was. We surveyed the size of the friends lending market across the UK and when you translate that into value, we almost fell off our chairs.”
Using the example of someone trying to fund an MBA, Cavanagh explained that while people could theoretically do a whip around of friends and family, asking to borrow £500 to £1000 from 10 to 15 people, no one does due to the inherent complications and awkwardness associated with such lending.
Using the example of someone trying to fund an MBA, Cavanagh explained that while people could theoretically do a whip around of friends and family, asking to borrow £500 to £1000 from 10 to 15 people, no one does due to the inherent complications and awkwardness associated with such lending.
Cavanagh disagrees and argues that by making it both more formal and so easy to do, Flender’s solution is actually a lot less awkward than lending £500 to a mate, which is then never paid back.
“It’s going to maintain friendships more than anything,” he argued. “[Informal lending] is already going on to the value of £2.9bn a year, and that’s creating problems because it’s not formalised.
“It’s going to maintain friendships more than anything,” he argued. “[Informal lending] is already going on to the value of £2.9bn a year, and that’s creating problems because it’s not formalised.
With the Orca Money comparison engine, IFISA investors are encouraged to research and compare thoroughly before they invest, as the rules are different to other ISA products. Orca research materials translate the guidelines governing the Innovative Finance ISA into simple, consumable and easy-to-understand content. Retail investors can get a quick overview of IFISA providers or dig into greater detail about the IFISA and/or the P2P lending platforms who offer them.
Dianrong, a Chinese P2P lending pioneer and technology leader announces that 2016 loan originations reached approximately 16.23 Billion RMB, representing a 148% increase over 2015. Growth in loans issued was funded by an astonishing 3.62 million investors, illustrating the breadth and scope of Dianrong’s business model.
During the year, Dianrong was named one of China’s top three online lenders by the renowned rating website, Wdzj.com, and Yingcan Consulting Company in their “Development Index Rating of the Top 100 Online Lending Platforms for October 2016”.
Last year marked the fourth consecutive year of strong growth in origination for Dianrong, hitting approximately RMB 60 million, RMB 790 million, RMB 6.55 billion and RMB 16.23 billion in 2013, 2014, 2015 and 2016 respectively.
Offshore law firm Harneys has won two Deal of the Year awards from China Business Law Journal for its work on the Kaisa Group’s debt restructuring and HengXinLi’s launch of the first global real estate crowdfunding platform in China. Award winners were announced on Jan. 13.
The first global real estate crowdfunding platform in China is designed to provide Chinese investors with access to real estate in major international cities. The platform is aimed at middle-class Chinese nationals who want to invest in real estate in countries such as the U.K. and the U.S.
How many investment projects do you usually review, and how many do you typically invest in?
We look at over 1,000 opportunities a year, of which we typically do something like five to six projects. I am pretty sure that China will have the world’s biggest companies in fintech, robotics, and areas like cloud computing and software.
If you have to pick one, which start-up in China looks the most promising to you?
Hard to pick a winner, but in my portfolio, I am very excited about the prospects of Tujia, the Airbnb of China; FangDD, the largest online/offline real estate transaction platform; and PPDai, the largest pure-play peer-to-peer lending platform. These all have the opportunities to become decacorns.
LendIt, the world’s biggest show in lending and fintech, made several major announcements today related to China. First, LendIt announced the official launch of Lang Di Fintech 2017, its 2nd annual Chinese fintech conference held on July 15-16 at the Kerry Hotel, Pudong, Shanghai. Second, LendIt announced its partnership with JadeValue Fintech, a leading Chinese fintech incubator, to co-host the 2nd annual Chinese edition of the PitchIt@LendIt startup competition. Finally, LendIt officially launched its daily fintech news channel called LendIt News on its brand new Lang Di WeChat channel.
This daily news brief is curated by the LendIt content staff to highlight the most important fintech news stories from around the world. This is the first launch of LendIt News, which rolls out in the U.S. in the coming months. You can find LendIt News at or at WeChat account langdifintech.
According to the World Bank, only 36 percent of Indonesians have access to banking services and merely 13 percent borrow from formal financial institutions. While there are almost 60 million MSMEs, which provide over 100 million jobs in the country. Most of them cannot get the financing they need to expand.
Fintech-based lending can potentially fill the country’s existing financing gap of almost Rp 1 quadrillion (US$75 billion). In addition, peer-to-peer lending and crowdfunding fintech particularly can tap into the MSMEs, of which only 20 percent are currently bankable. Giving them access to initial or additional funding will definitely enable them to launch or to expand their business.
The IT-Based Lending Regulation is the most developed articulation we have seen of a set of basic rules for the conduct of marketplace lending in Indonesia, although the regulation provides that further details regarding many detailed operational aspects will be regulated in further OJK Circular Letters.
News Comments Today’s main news: Private student loans continue healthy performance trends. Today’s main analysis: Foreign investors purchase U.S. agency, corporate debt. Today’s thought-provoking articles: UK government invests GBP 85mil in P2P lending. FCA claims distribution-channel neutrality. United States Private student loans continue healthy performance trends. AT: “It’s about time for some good news.” Foreign investors […]
UK government invests 85 BP in P2P lending. AT: “This is interesting because UK regulators are trying to curb P2P lending to some extent. In light of FCA concerns recently publihed, we think this is a positive sign that there is still interest and continued growth in P2P lending.”
MeasureOne, a higher education data and analytics firm focused on the $1.4 trillion-dollar student loan market, today released its semiannual Private Student Loan Report showing continued strong performance among private loans originated to finance undergraduate and graduate education. According to MeasureOne data, delinquency rates declined between 9 and 15 percent for both undergraduate and graduate loans, originations increased by more than 5 percent, and charge-offs declined by 21 percent with the lowest third-quarter charge-off rate since before the financial crisis.
Research in this report reflects data as of Q3 2016 for private student loans and does not include federal student loan data. Private student loans, which are credit-based loans underwritten by lenders, make up roughly 7.5 percent – approximately $102 billion – of total student loans outstanding. The remaining 92.5 percent of the $1.4 trillion in total student loans are federal loans.
Private Student Loan Data Highlights as of Q3 2016
Overall delinquency rates declined to their lowest levels since peaking between 2008-2010.
The early-stage delinquency rate (30 to 89 days past due) declined to 2.7 percent, down 9 percent since a year ago and down 44 percent compared to five years ago.
The late-stage delinquency rate (90 days or more past due) declined to 1.9 percent, down 15 percent since a year ago and down 51 percent compared to five years ago.
The overall private student loan outstanding balance increased by 0.8 percent to $102 billion with undergraduate loans continuing to make up a greater percentage of the overall balance at 86 percent compared to graduate loans at 14 percent.
Private student loan originations in academic year 2016/2017 increased to more than $3 billion as of Q3 2016, an increase of 5.5 percent compared with academic year 2015/2016. Of this total, 93 percent were cosigned and 99 percent were school certified. Undergraduate loans accounted for 89 percent and graduate loans accounted for 11 percent.
Annualized charge-offs (defaults) declined by 21 percent year over year and stand at 1.9 percent of loans in repayment, the lowest Q3 charge-off rate since before the financial crisis.
The full MeasureOne Private Student Loan Report is available at
Foreign Investors to Continue Purchasing U.S. Agency and Corporate Debt (Morningstar Credit Ratings Email), Rated: AAA
Morningstar Credit Ratings just published Fixed-Income research report: Foreign Investors to Continue Purchasing U.S. Agency and Corporate Debt
Foreign investment in U.S. agency and corporate debt has been driving capital flows in the U.S. fixed-income market, while at the same time, foreign investors, led by China, have been net sellers of U.S.
Treasuries through the first three quarters of this year. Morningstar believes that foreign investors will add U.S. agency and corporate debt to their portfolio holdings under the Trump administration, as they continue their search for yield.
In addition, the incoming administration has signaled its desire to reduce regulatory burdens under the Dodd-Frank Act and to implement measures to boost the economy, both of which could potentially bolster bond issuance.
Amid the backdrop of negative yields, tepid global growth, and uncertainty regarding the effects of Brexit, foreign investors have increasingly sought out the U.S. agency and corporate debt markets to bolster the return on their portfolios and to fund their existing liabilities. In the case of corporate bonds, however, some industries, such as energy and mining, may be susceptible to an increase in defaults.
Meanwhile, Treasury yields should climb further, as market participants expect the Fed to raise key interest rates in December.
We have already witnessed the yield on the 10-year U.S. Treasury surpassing 2.5%, the highest level seen this year, in response to rising oil prices and expectations that the Trump administration will be supportive of infrastructure investment, tax cuts, and a less restrictive regulatory environment.
ApplePie Capital, the first online lender solely dedicated to the franchise industry, today announced that it has entered into a $180 million loan purchase agreement with TowerBrook Capital Partners L.P. (TowerBrook) to purchase franchise loans originated by ApplePie over a two-year period. Funding will come from TowerBrook’s Structured Opportunities Fund and a credit facility provided by SunTrust Banks, Inc. (NYSE: STI). The TowerBrook relationship will enable ApplePie to further strengthen its position as a leading provider of innovative growth financing for the franchise industry.
ApplePie simultaneously announced a $16.5 million Series B round, co-led by QED Investors and Fifth Third Capital, the direct equity investment subsidiary of Fifth Third Bancorp. QED Investors follows its previous investments in ApplePie’s Seed and Series A rounds, while Fifth Third Capital is expected to add significant strategic value and open up new opportunities for growth. Previous investors participating in the Series B include Signia Venture Partners, Freestyle Capital, and Prosper president Ron Suber. Also participating in the round is Colchis Capital Management, L.P., a prominent investor in the online lending space.
As part of the agreement with TowerBrook, ApplePie also announced the addition of Tim Morris, former Chief Risk Officer of GE Capital Franchise Finance, as a strategic advisor to the firm. Tim spent over 25 years at GE Capital, a leading franchise lender specializing in financing mid-market operators in the restaurant industry.
Money360, the leading commercial real estate marketplace lending platform, announced today that it has provided financing to a commercial property owner for the value-add renovation of a full-service boutique hotel to enable the hotel’s affiliation with the flagged hospitality brand, Ascend Collection Hotels.
The $1.848 million bridge loan is secured by a 67-room hotel with an indoor pool, ballroom, restaurant, fitness center, and bar and tavern. The hotel, located in upscale Aurora, Ohio, has served as a marquee property in the community since its opening in 1927.
Positioned on 3.1 acres, the property has already seen significant benefit from the implementation of the strategic renovation plan, with average room rates increasing by 30 percent as a result of the initial improvements. Loan proceeds will fund the remainder of the renovations, including additional updates to the rooms, corridors, spa and restaurant, expansion of common areas and lounges, improved landscaping, and the creation of an outdoor event space.
Private equity investing in commercial real estate has undergone a major change in recent years. Prior to 2013, commercial building owners seeking equity partners could not solicit investors unless they knew the people they were soliciting. This ban on “general solicitation” was part of the securities regulations. It made CRE investing difficult for most investors because opportunities depended on having industry contacts and were shared mostly by word-of-mouth referrals and in-person meetings.
Then came the Jumpstart Our Business Startups Act, known colloquially as the JOBS Act. Part of this legislation lifted the ban on general solicitation, allowing sponsors to broadly advertise investment opportunities to accredited investors. These new rules are helping open the CRE industry to a much broader pool of investors.
Online platforms connecting investors with real estate investment opportunities are one way that investors are gaining new access to the CRE industry. These platforms provide the infrastructure for sponsors to both generally solicit accredited investors and, just as important, provide them with needed information about real estate investing.In 2015, according to research firm Massolution, $2.5 billion was invested on a global scale through online equity crowdfunding platforms. This year, the amount is projected to hit $3.5 billion. Here are the three key benefits of using online platforms for real estate investing:
Options – Accredited investors are given the gift of choice in the digital age.
Transparency – Good online platforms facilitate strong relationships between sponsors and investors.
Lower fees – Platform fee structures differ, and investors should be aware of the fees charged by both the platform and sponsor.
£85 million of taxpayer money is invested in the peer-to-peer (P2P) lending sector, an industry where the financial regulator identified “evidence of potential investor detriment” in a report last week.
The state-owned British Business Bank (BBB) has £60 million invested on Funding Circle, £15 million invested on MarketInvoice, and £10 million on RateSetter, according to a Freedom of Information request seen by Business Insider.
While the FCA does not identify any specific firms in its report, it flags certain practices such as intervention by peer-to-peer lenders to influence loan performance and lending to provision funds (special vehicles meant to pay for a certain amount of investor losses).
The Financial Conduct Authority has revealed plans to investigate whether rules introduced by the Mortgage Market Review favoured certain types of mortgage distribution.
The regulator confirmed it would examine whether the rules introduced as part of the Mortgage Market Review had favoured some forms of distribution over another “and whether this is in the interest of consumers.
”The FCA’s feedback paper said: “As a regulator, we are keen to ensure that our rules work towards maximising the benefits that consumers can get from information or advice.
“The FCA remains distribution-channel neutral, but we will take the opportunity in the market study to look at changes in distribution since the Mortgage Market Review, including assessing whether our rules have affected firms’ ability and incentives to innovate, and whether they have led to outcomes that are in the best interests of consumers.
“It will also explore whether commercial arrangements between lenders, brokers and other players lead to conflicts of interest or misaligned incentives to the detriment of consumers.
The U.K.’s Financial Conduct Authority is looking to introduce new rules aimed at protecting investors of the alternative lending community, reports said Friday (Dec. 9).
The move coincides with the FCA’s release of its preliminary findings into its review of the alternative lending industry, which includes crowdfunding and peer-to-peer lending. The inquiry, launched in July, concluded that risks are difficult to assess, and it is difficult to compare the risks of investing in this field from platform to platform.
Further, while the FCA requires these alternative lending platforms to be “clear, fair and not misleading” for investors, this doesn’t always happen, the agency said.
He has eight years of experience in sales, including being former Head of Sales at Djuice Uppsala. Siemiatkowski has received multiple awards for his leadership including runner up in the 2015 Global EY Entrepreneur of the Year Award, Leader of the Year by Adecco, and European Entrepreneur of the Year Award by TechTour. Siemiatkowski holds a Master’s economics degree from Stockholm School of Economics.
What were your early years like?
As a kid, I used to spend a lot of time coming up with business ideas, and I read a lot of business books about successful entrepreneurs like Richard Branson. I started working early in life—my first job was flipping burgers at a Burger King fast food outlet. Then I worked in telesales, making cold calls and selling products. At age 21, I was promoted to become the manager of the sales team. It was the first time I started to learn about managing a team.
What has been your biggest challenge?
My challenge is to consistently push myself and set high expectations. At each stage of my career I’ve questioned my ability to succeed in new and challenging environments. I ask myself if I’m good enough, if I’m growing and changing fast enough, if I am adapting to changes.
What are some important leadership lessons you’ve learned over the years?
Early on, I learned that if I wanted to build a large and successful company, I would need to go out and find the right people to work with—people who have the ambition and skills to help me achieve my ultimate vision. It is important to establish a world-class team.
How do you motivate your team?
Therefore, employers must ensure that their employees work in an environment in which they can fly.
How do you hire?
I am very keen to understand people’s backgrounds, including where they are coming from. To a large degree, I am looking for their motivating factor—I want to see that they have the drive and hunger to accomplish great things.
In the fourth episode of our series on financial technology, we sat down with Anju Patwardhan, a Fulbright Fellow researching fintech at Stanford University who previously served as the Chief Innovation Officer for Standard Chartered Bank, one of the world’s largest and most international banks.
We invited Anju to speak with us about her experiences managing fintech activities at a bank, the potential for collaboration and competition between fintech start-ups and traditional banks, and her research activities at Stanford.
News Comments Today we show that while VCs are pulling out of fintech , banks, and mostly Goldman Sachs in fact, are moving in. Jubao and Tencent are using social media for underwriting, apparently effectively. And an interesting article pointing out how Morgan Stanely apparently sold 1 BBB- bond to their private bank clients at […]
A reduction by 49% of VC-funded fintech in Q2 2016. ( KPMG and CB Insights report). The interesting part of the report is that many banks and financial institutions have shifted “from denial that change is required to a realization that change is necessary and a growing interest in learning how fintech can help better meet the needs of their customers,” the report noted. And therefore among big banks, Goldman Sachs led the charge on investing in the industry, with 11 deals during the past five quarters, followed by 7 each at Citigroup and Banco Santander.
During the second quarter, VC-funded fintech dropped 49 percent to $2.5 billion from $4.9 billion in the prior quarter. Meanwhile, the number of deals closed fell 12 percent to 195 from 221 in the first quarter, according to a report from KPMG International and CB Insights on Wednesday. (Overall, fintech funding rose to $9.4 billion, a number driven in large part by a $4.5 billion round from Alibaba’s Ant Financial, a private funding round not included in the VC numbers.)
They expect lower levels of funding to continue through the end of 2016 as investors wait to see how conditions shake out.
North America made up the largest share of deals with $1.3 billion funded across 97 deals, down from $1.8 billion across 130 deals in the prior quarter.
At the same time, corporate participation in fintech deals made up a larger share of the total as companies look to the sector to help them test new technology and respond to consumer demand for new ways to engage with their money. This group participated in nearly a third of deals in the second quarter, up from 24 percent in the prior quarter.
Many banks and financial institutions have shifted “from denial that change is required to a realization that change is necessary and a growing interest in learning how fintech can help better meet the needs of their customers,” the report noted.
Among big banks, Goldman Sachs led the charge on investing in the industry, with 11 deals during the past five quarters, followed by 7 each at Citigroup and Banco Santander.
There’s a famous Aesop’s fable, “The Donkey and His Purchaser.”
As the story goes, a man purchased a donkey, but before he finalized the sale, he asked the farmer if he could take him home and try him out. When he did, and he observed that the first thing the donkey did was seek out the laziest donkeys to hang out with, he immediately returned him. His explanation was that he didn’t need to see how he performed at work, all he needed to see was which animals he wanted to associate with and that told him everything he needed to know.
The moral of the story is simple: “You are known by the company you keep.”
The Financial Times recently reported on Jubao and Tencent, two Chinese online finance firms, using social media data to assess credit risk, more or less, by the company they keep. According to Jesse Chen, co-founder of Jubao Internet Technology, a top P2P lending agency in China, “If we find you are [social media] friends with celebrities from the entertainment or finance industries, we think you must be to some extent trustworthy . . . since otherwise you wouldn’t have such friends.”
There are two fundamental reasons why China is using data collected from social media to fuel its lending industry, Madhu explained. First, social media use is rampant in China, as it is in the U.S., and established social media platforms are now a legacy providing rich resources for firms seeking valuable personal data. Second, China’s centralized credit scoring system is largely incomplete.
Madhu said that in China, traditional credit rating data such as banks’ records of loan defaults and repayments, are held by the Central Bank, but these data only cover one-third of the population and, up to a year ago, were only accessible to banks. Even though the recent decision to expand access to eight companies, including Tencent and Alibaba, opens up access, the data that can be obtained from those archives doesn’t cover the vast majority of people for whom borrowing money is attractive.
That, Madhu explains, is why Tencent’s WeChat is such an attractive and useful repository for the kind of data that would help the country’s alternative lenders better know their potential borrowers. Its 762 million people do just about everything within the WeChat ecosystem: chat with a friend about where to go to eat, place an order on that restaurant’s website, turn up at the restaurant, see the order on the restaurant’s app order screen and pay for the order — all without ever exiting the WeChat platform.
Madhu is confident that using social media to assess lending risk will grow very quickly in developing countries with limited credit system infrastructure and where the unbanked and underbanked have little means of obtaining financing.
OnDeck Capital generated strong Q2 results when focusing on the correct metrics.
The market has forgotten that the company is still a fast growing fintech.
The stock is still incredibly cheap after bouncing off an extremely low valuation.
Even after the rally, OnDeck Capital only has a market value of $450 million. The stock trades at $6 now and traded near $28 after the IPO. The ironic part is that the story hasn’t exactly unraveled in the 20 months since the IPO with explosive loan origination growth of 41% in the last quarter.
When the fintech stocks came public, the market was slapping P/S multiples of 10 on the stocks. Now after a little trouble in the sector, the market will only award multiples around 1 to 2x sales. The right valuation metric is always difficult to derive in a new business model, but the correct multiple is probably somewhere in the middle of these two extreme scenarios.
The firm has named Jeff Hodges as chief financial officer and Scott Askins as general counsel and secretary.
Also, Richard Schafrann has been tapped to lead Kabbage’s capital markets staff.
Previously, Previously, Hodges was CFO of Official Payments while Askins was vice president, assistant general counsel and assistant secretary for WebMD Corp. Schafrann is a former managing director at Goldman Sachs. Kabbage’s backers include Reverence Capital Partners, SoftBank Capital, Thomvest Ventures, Mohr Davidow Ventures, BlueRun Ventures and Santander InnoVentures.
We did it again! For the second consecutive year, we’re thrilled to announce that Kabbage has been ranked on the Inc. 500 list. Kabbage is included in the top 50% of the the nation’s fastest growing companies, claiming spot number 183 on this year’s list.
Since the launch of Kabbage to SMBs just five years ago, we’ve expanded the product’s capabilities to now serve more than 80,000 businesses – from retailers to construction businesses to professional service firms – and now power more than $2 billion in lending transactions around the globe.
“Technology is transitioning from a competitive advantage to a competitive requirement.”
The company’s hosted Aladdin platform is used by 20,000 investment professionals around the world. It combines risk analytics with portfolio management, trading and operations tools on a single platform.
BlackRock also acquired software-driven portfolio manager, FutureAdvisor in 2015. It was the first time a major financial services company acquired a roboadvisor. Robos like FutureAdvisor are efficient distribution channels for distributing the firm’s iShares ETFs. LPL Financial is one of the first major financial institutions to use BlackRock’s software for its digital advice platform.
“We also believe that the evolving technology and regulatory landscape including the new DOL rule in the U.S., digital advice will play an integral role in increasing access and transparency for investors,”
Orchard Platform, the technology and data provider for the online lending space, today announced that ApplePie Capital, the first online lender solely focused on the franchise industry, has been integrated into its Market Data product.
The franchise industry represents a large and growing segment of small business borrowers, with an annual demand for capital in excess of $45 billion.
“We’re thrilled to announce the addition of ApplePie to our Market Data product,” said Orchard CEO Matt Burton. “ApplePie has an extremely unique offering that will provide institutional investors access to a strong and well-understood loan pool, and ApplePie’s inclusion in Orchard’s Market Data product will provide ApplePie with additional exposure to leading fixed-income investors.”
The integration of ApplePie’s data reflects Orchard’s commitment to providing small business originators with access to a diverse set of capital providers.
Global investment bank Morgan Stanley underwrote a large bond issue for Repsol (rated BBB-, negative, that is, on the verge of becoming a junk bond) and then sold this same bond to Morgan Stanley´s own private banking client base. As Repsol is deeply indebted and facing an uncertain future, the company has had difficulty tapping the professional institutional bond market in recent years.
The solution? Morgan Stanley sells Repsol bonds to their own captive, much less sophisticated Private Banking clients who are desperately seeking yields on their fixed income investments in the ongoing near zero (or even below zero) interest rate environment for traditional fixed income and bank deposits.
What is the compensation for Morgan Stanley private banking clients for assuming Repsol risk over the lifetime of the bonds until they reach maturity several years from now? Less than 1 per cent per year. Not a very generous risk adjusted return, especially considering the very poor rating of the Repsol bond. It is difficult to understand how the army of investment strategists, analysts, and portfolio managers of all kinds in the employ of Morgan Stanley are not able to offer their own wealth management clients in their Private Banking division a more worthwhile alternative.
What are the specific advantages of marketplace lending investment over traditional fixed income investments? I highlight the following:
Attractive, consistent returns across marketplaces and strategies:
The chart below tracks the performance of this index since 2011. Despite the scary headlines concerning problems at US platforms such as Lending Club, what we see is years of steady, predictable, attractive performance between 6% and 8% per year.
Source: AltFi Data
In the United Kingdom, the Liberum AltFi Returns Index measures the returns for investors generated from marketplace lending through the leading UK platforms.
Again, we see years of steady, attractive returns for savers, averaging between 5 per cent and 6 per cent per year.
Source: AltFi Data
Diversification of Risk. Marketplace lending by its very nature lends itself to broad diversification.
Self Liquidation As marketplace lending loans typically have much shorter maturities than traditional fixed income investments, an investor can normally recover their investment through maturity of the underlying loans. In the case of invoice lending and trade finance, loans are typically between 60 to 90 days, while real-estate bridge finance in rarely longer than a year. These shorter maturities are an enormous advantage when compared to holding longer maturity traditional bonds as a fixed income investor.